Yesterday, the shares of
Constellation Brands Inc.
) reached a new 52-week high of $39.65, beating its previous
52-week high of $38.99 attained on Jan 17. Continued synergies
from the sturdy third-quarter fiscal 2013 performance and a
strong outlook facilitated a consistent rise in volumes traded of
Constellation Brands, which drove the shares to hit the 52-week
high mark twice in a span of 12 days.
Average volume of shares traded over the last 3 months stands
at approximately 1,904,990. This Zacks Rank #2 (Buy) beverage
company closed trade at $39.42 on Jan 29, representing a solid
return of approximately 37.6% over the past six months.
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 attributes that
pushed the shares of Constellation Brands to a new high.
The recent third-quarter fiscal 2013 results have added to its
streak of upbeat performances. Constellation Brands 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 improved
Net sales in the quarter increased 9% to $766.9 million from the
year-ago quarter and 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
Besides Constellation Brands, other beverage-alcohol companies
Companhia de Bebidas Das Americas
) posted robust earnings results in the recently reported
Further, we believe that Constellation Brands' 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 18.1x, 8.6% discount to the
peer group average of 19.8x. Both price-to-book and
price-to-sales ratios stand at 2.6, in line with the peer group
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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