New High for Constellation Brands - Analyst Blog
January 30 2013 - 12:44PM
Zacks
Yesterday, the shares of Constellation Brands
Inc. (STZ) 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
margins.
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 $2.10.
Besides Constellation Brands, other beverage-alcohol companies like
Companhia de Bebidas Das Americas, or
AmBev (ABV), Brown-Forman
Corporation (BF.B) and Beam Inc. (BEAM)
posted robust earnings results in the recently reported
quarters.
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 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%.
AMBEV-PR ADR (ABV): Free Stock Analysis Report
BEAM INC (BEAM): Free Stock Analysis Report
BROWN FORMAN B (BF.B): Free Stock Analysis Report
CONSTELLATN BRD (STZ): Free Stock Analysis Report
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