Constellation Brands Hits 52-Week High - Analyst Blog

By Zacks Equity Research,

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Shares of Constellation Brands Inc. ( STZ ) reached a new 52-week high of $81.51 yesterday and closed the trading session at $80.06. Apart from strong third-quarter fiscal 2014 results and an upbeat guidance, the stock has been performing well on the back of brand building and inorganic growth initiatives. Notably, the stock price of this beverage company rose over twofold in one year.

The average volume of shares traded over the last 3 months was approximately 1,402K. Moreover, the company currently trades at a forward P/E of 25.07x, a 2.2% discount to the peer group average of 25.64x. The last traded price is 6.9% below the Zacks Consensus average analyst price target of $86.00. The long-term estimated earnings per share (EPS) growth rate is 15.3%.

Investors are optimistic about this Zacks Rank #1 (Strong Buy) stock after it posted EPS of $1.10 that handily surpassed the Zacks Consensus Estimate of 91 cents and rose 74.6% year over year. Constellation Brands reported net sales of $1,443.3 million, which rose 88.2% on a year-over-year basis and came ahead of the Zacks Consensus Estimate of $1,386 million.

The year-over-year increase in top-line growth was primarily attributable to complete consolidation of the Crown Import business.

The stronger-than-anticipated results prompted management raised its earnings guidance. Adjusted earnings per share for fiscal 2014 are now likely to be in the range of $3.10-$3.20 per share, compared with $2.80-$3.10 projected earlier.

Constellation Brand's history of positive earnings surprises also make investors bullish about the stock. We observe that the company has beaten the Zacks Consensus Estimate in the past 3 out of 4 quarters by an average of 6.5%.

Constellation Brands' sustained focus on brand building and initiatives to introduce new products in the wine and spirits business are also catalyst behind stock's momentum. This is well evident from the company's recent acquisition of Grupo Modelo SAB de C.V.'s U.S. beer business from Anheuser-Busch InBev SA/NV ( BUD ). Moreover, Constellation Brands is enhancing its distribution channels in retail and is effectively implementing strategic merchandising initiatives to augment sales.

Apart from Constellation Brands, other stocks like Macy's Inc. ( M ) and Gildan Activewear Inc. ( GIL ) achieved new 52-week highs of $56.65 and $54.99 respectively, on Jan 13, 2014.

ANHEUSER-BU ADR (BUD): Free Stock Analysis Report

GILDAN ACTVWEAR (GIL): Free Stock Analysis Report

MACYS INC (M): Free Stock Analysis Report

CONSTELLATN BRD (STZ): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: BUD , EPS , GIL , M , STZ

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