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Constellation Brands Hits 52-Week High - Analyst Blog

By: Zacks.com
Posted: 9/11/2013 2:15:00 PM
Referenced Stocks: CMI;EPS;HI;SAM;STZ

Shares of Constellation Brands Inc. ( STZ ) touched a new 52-week high of $58.32 on Sep 10, and eventually closed trade at $58.24. The stock has been performing well on the back of efficient brand building and execution of inorganic growth initiatives. This specialty retailer has amassed a year-to-date return of 55.1%.

The average volume of shares traded over the last 3 months was approximately 1,663.9K. Moreover, the company currently trades at a forward P/E of 20.60x, a 5.5% discount to the peer group average of 21.79x. The last traded price is 8.1% below the Zacks Consensus average analyst price target of $63.40.

Additionally, the company's long-term estimated earnings per share (EPS) growth rate is 14.4%. Constellation Brands now carries a Zacks Rank #2 (Buy).

Constellation Brands' sustained focus on brand building as well as initiatives to introduce new products in its wine and spirits business are the major factors that led to the stock's price appreciation. Owing to its strategic endeavors, the company is witnessing strong depletion trends and increasing market share in the U.S. wine and spirits category. Moreover, Constellation Brands is enhancing its points of distribution in retail and is effectively executing strategic merchandising initiatives to boost sales.

The company's strategic initiatives to strengthen its foothold in the U.S. wine industry and efforts to increase its portfolio of brands are driving growth. 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.

Considering the positive impact from the recent acquisition of Grupo Modelo, management raised its earnings guidance for fiscal 2014 to $2.60-$2.90 per share from $2.55-$2.85 projected earlier. Going forward, the company aims to enhance the distribution of the brand in order to drive incremental profits.

Apart from Constellation Brands, other stocks such as Boston Beer Co. Inc. ( SAM ), Cummins Inc . ( CMI ) and Hillenbrand, Inc. ( HI ) achieved new 52-week highs of $229.33, $132.40 and $26.60, respectively.



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