Looking for Lucrative Alcohol Picks? Buy Constellation Brands

Constellation Brands, Inc.STZ is one of those stocks that never lets investors down. Backed by its strategic growth initiatives, this alcohol behemoth has put up a spectacular show in the past. The company's superb earnings record and ongoing prospects are also visible from its stock price performance.

Evidently, the company has surged a whopping 40.5% so far this year, outperforming the industry 's 26.8% growth. So let's take a detailed look at the factors that are most likely to keep driving this Zacks Rank #2 (Buy) stock's momentum.

Focus on Enhancing Brand Portfolio Leads to Solid Market Position

Constellation Brands has a formidable portfolio of well-known brands and is the largest wine company in the world. The company holds a dominant position in the premium wine and beer segment in the United States, alongside being a leading producer of wine in Canada and New Zealand. This provides it with a competitive edge and also bolsters its well-established position in the market. Further, the company's consistent focus on brand building and initiatives to include new products remain key revenue drivers for the stock.

Beer Business Strength Fuels Growth

Thanks to its strategic endeavors, the company is witnessing increasing market share, especially in the U.S. beer category. Notably, the company was the highest growth contributor in the United States' beer category for the fourth straight year, in fiscal 2017. Also, Constellation Brands is focused on expanding in the craft beer space, which has become a solid growth avenue in the beer space. In this regard, management expects solid results from its Ballast Point craft beer brand, which is currently placed among the top 20 craft brands nationwide. Also, confidence in the beer business was one of the major drivers of the company's recently raised outlook, as discussed below.

Expansion Initiatives Bode Well

Constellation Brands focuses on expanding operations directed toward achieving business growth. In the beer segment, the company's expansion plans are anchored by the recent acquisition of the Funky Buddha Brewery, a leading craft brewery in Florida; the introduction of Fathom IPA by Ballast Point Brewery and the Obregon Brewery buyout among others. The company also sees immense growth potential for its spirits and wines business. Evidently, Constellation Brands acquired America's highest rated Schrader Cellars in June to enhance its fine wines kitty. Also, in fiscal 2017, the company purchased and integrated High West Distillery, Charles Smith Wines and The Prisoner Wine Company brands.

Q2 Retains Stellar Surprise History, Outlook Boosts Estimates

The aforementioned factors are enough to decipher Constellation Brands' past record. Notably, the company's second-quarter fiscal 2018 earnings marked its 12th straight earnings beat and 17th consecutive quarter of year-over-year improvement. Moreover, the top line improved year over year and returned to a beat trend. Management remained encouraged by the outstanding results, which was marked by significant market share gains, margin expansion, strong free cash flow and solid execution. This along with the strength in the beer business led the company to raise earnings outlook for fiscal 2018. Management also raised fiscal 2018 operating income targets for the beer segment.

Constellation Brands Inc Price and Consensus

Constellation Brands Inc Price and Consensus | Constellation Brands Inc Quote

The splendid quarter and encouraging outlook have also perked up the Zacks Consensus Estimate. Over the past 30 days, the Zacks Consensus Estimate for fiscal 2018 and 2019 has risen to $8.43 and $9.28, from $8.16 and $9.14 respectively. All said, we believe that Constellation Brands' stellar show is most likely to go on.

Looking for Similar Bets? Check These Stocks From Constellation Brands' Space

Brown-Forman Corporation BF.B carries a Zacks Rank #2 and a Growth Score of B. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Craft Brew Alliance, Inc. BREW , which also carries the same Zacks Rank as Brown-Forman has delivered back-to-back positive surprises on the bottom-line front in the past two quarters.

Carlsberg A/S CABGY with a Zacks Rank #2, has jumped 33.1% on a year-to-date basis.

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Brown Forman Corporation (BF.B): Free Stock Analysis Report

Constellation Brands Inc (STZ): Free Stock Analysis Report

Craft Brew Alliance, Inc. (BREW): Free Stock Analysis Report

Carlsberg AS (CABGY): Free Stock Analysis Report

To read this article on click here.

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.

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

In This Story


Other Topics


Latest Markets Videos


Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at

Learn More