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Constellation Brands’ Stock Outperforms Peers in 2016

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STZ rises in 2016

On July 1, 2016, Constellation Brands’ (STZ) stock was trading at $163.61, which represents a rise of 16.3% on a YTD (year-to-date) basis. The company’s stock price rose by 3.8% on June 30 following strong results for fiscal 1Q17, which ended on May 31, 2016. As discussed in the first and second parts of this series, Constellation Brands beat analysts’ earnings and sales estimates for fiscal 1Q17. On a YTD basis, Constellation Brands’ stock has outperformed the S&P 500 Index, which has risen by 4.5%. In 2015, Constellation Brands’ stock price rose by 46.1%, outperforming the S&P 500 Index, which fell by 0.7%.

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Comparison with peers

Constellation Brands’ shares have outperformed those of its alcoholic beverage peers. As of July 1, the stock prices of Anheuser-Busch InBev (BUD), Molson Coors Brewing Company (TAP), and Brown-Forman (BF.B) have risen by 7.3%, 9.2%, and 1.7%, respectively, on a YTD basis.

Constellation Brands constitutes 2.3% of the Consumer Staples Select Sector SPDR Fund (XLP). As of July 1, XLP has risen by 10.1% YTD.

Analysts’ recommendations

As of July 1, 65% of analysts, or 13 out of 20, had a “buy” recommendation for Constellation Brands’ stock. Five analysts had a “hold” recommendation, and two analysts had a “sell” recommendation. The consensus “buy” rating for Constellation Brands’ stock is backed by its consistent performance, strong market positioning, an impressive portfolio of popular Mexican beer brands, and the company’s focus on expanding its portfolio of premium brands across its beer, wine, and spirits portfolios.

As of July 1, the 12-month target price for Constellation Brands’ stock is $182.75, which represents a return potential of 11.7%. The company’s 12-month target price has been raised after its strong fiscal 1Q17 results, which were announced on June 30. Prior to fiscal 1Q17 results, the 12-month target price for Constellation Brands was $178.53 on June 29.

We’ll discuss Constellation Brands’ valuation in the concluding part of this series.

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