Impressive third-quarter fiscal 2013 results and strong
outlook facilitated the shares of
Constellation Brands Inc.
) to reach a new 52-week high of $38.99 yesterday, before closing
at $38.55. This Zacks Rank #2 (Buy) company has amassed a solid
return of approximately 86.0% since Jan 3, 2012. Average volume
of shares traded over the last 3 months stands at approximately
Drivers that Triggered Momentum
An impressive record of beating the quarterly earnings
expectations, an upbeat fiscal 2013 outlook, a sustained focus on
brand building as well as initiatives to bring in new products in
its wine and spirits business, are the major growth drivers for
the shares of Constellation Brands.
The recent third-quarter fiscal 2013 results add to its streak
of upbeat performances. Constellation Brands, which competes with
) posted adjusted earnings of 63 cents per share that surged over
21% from the year-ago quarter and surpassed the Zacks Consensus
Estimate of 55 cents, primarily driven by increased sales and
Net sales in the quarter increased 9% to $766.9 million from
the year-ago quarter that also came ahead of the Zacks Consensus
Estimate of $744.0 million. Net sales gained on the back of
higher volumes and better product mix.
Bolstered by strong quarterly performance, the company raised
its fiscal 2013 adjusted earnings guidance to a range of $2.10 to
$2.20 per share, up from the earlier projection of $2.00 to
Further, we believe that the company's continued focus on
brand building and enhancing market share through acquisitions
are accelerating its growth opportunities. During calendar year
2012, Constellation Brands acquired the remaining 50% stake in
Crown and the California-based Mark West wine brand.
Stock's Key Indicators
From valuation perspective, Constellation Brands looks
compelling, suggesting further room for growth. The stock
currently trades at a forward P/E of 17.72x, 9.1% discount to the
peer group average of 19.50x. Again, its price-to-book and
price-to-sales ratio of 2.54 and 2.49, respectively, are nearly
in line with the peer group average. Moreover, the company's
return-on-equity (ROE) and return-on-asset (ROA) are 17.9% and
6.1%, respectively, which are higher than the peer group
averages. The company's strong fundamentals are well supported by
its long-term estimated EPS growth rate of 10.9%.
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