On Jul 3, 2014, Zacks Investment Research upgraded
Constellation Brands Inc.
) to a Zacks Rank #1 (Strong Buy) following its splendid quarterly
performance as well as raised guidance. Shares of this beverage
company rose to a new 52-week high of $94.77 yesterday, before
closing on $90.45.
Why the Upgrade?
Constellation Brands reported outstanding first-quarter fiscal 2015
results on Jul 2, wherein earnings jumped nearly threefold to $1.07
per share from 38 cents posted in the comparable year-ago quarter
mainly driven by the acquisition of Crown Imports business last
year. Moreover, quarterly earnings surpassed the Zacks Consensus
Estimate of 92 cents per share.
Net sales more than doubled from $673.4 million in the first
quarter of fiscal 2014 to $1,526.0 million in the reported quarter.
Moreover, the company's top-line was also above the Zacks Consensus
Estimate of $1,478.0 million. The year-over-year increase in top
line was primarily attributable to complete consolidation of the
Crown Import business as well as strong demand for beer.
The company's beer segment revenues increased 14% to $867.7 million
from $761.6 million in the comparable year-ago quarter. However,
the company's wine and spirits sales declined 2% year over year to
$658.3 million due to unfavorable foreign currency exchange rates
and lower shipment volume resulting from destocking of inventory by
distributors. On a constant currency basis, the segment's net sales
inched down 1%.
Following its strong start of the fiscal, the company raised its
forecasts for fiscal 2015. Constellation Brands now expects fiscal
2015 adjusted earnings to be in the range of $4.10-$4.25 per share,
up from previous guidance range of $3.95-$4.15 per share and
compared with $3.25 earned in fiscal 2014. On a reported basis,
earnings per share in fiscal 2015 are now anticipated to be in the
range of $3.90-$4.05 as against $3.75-$3.95 projected earlier and
$9.83 reported in fiscal 2014.
As the largest wine company in the world, Constellation Brands has
a formidable portfolio of well-known brands. The company's
consistent focus on brand building and its initiatives to include
new products in its wine and spirits business are the key revenue
drivers for the stock.
Owing to its strategic endeavors, it is witnessing robust depletion
trends and increasing market share in the U.S. wine and spirits
category. Moreover, the company is increasing its distribution
points in retail and effectively executing its strategic
merchandising initiatives, aimed at bolstering sales.
Other Stocks to Consider
Other well performing stocks in the Beverages-Alcohol space include
Castle Brands Inc.
) sporting a Zacks Rank #1 (Strong Buy) along with
Molson Coors Brewing Company
), both carrying a Zacks Rank #2 (Buy).
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