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Constellation Brands Announces New Share Repurchase Program

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Price movement

Constellation Brands (STZ) has a market cap of $31.5 billion. It rose 1.4% to close at $157.4 per share on November 21, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 6.4%, -5.8%, and 11.6%, respectively, on the day.

STZ is trading 1.7% below its 20-day moving average, 3.9% below its 50-day moving average, and 0.10% above its 200-day moving average.

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Related ETF and peers

The iShares Russell 3000 ETF (IWV) invests 0.12% of its holdings in Constellation Brands. The YTD price movement of IWV was 10.3% on November 21.

The market caps of Constellation Brands’ competitors are as follows:

  • Anheuser-Busch InBev (BUD) — $178.2 billion
  • Molson Coors Brewing Company (TAP) — $21.4 billion

Latest news on Constellation Brands

In a press release on November 21, 2016, Constellation Brands reported, “Constellation Brands, Inc. [STZ and STZ.B], a leading beverage alcohol company, announced today that its board has authorized a new share repurchase program of up to $1 billion of the company’s common stock to be utilized over time.”

The release continued, “This new program is in addition to the company’s current $1 billion share repurchase program. The company currently expects to execute the new $1 billion share repurchase authorization opportunistically in the future, subject to then-current market conditions and management’s discretion.”

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Constellation Brands’ performance in fiscal 2Q17

Constellation Brands reported fiscal 2Q17 net sales of $2.0 billion, a rise of 17.6% over its net sales of $1.7 billion in fiscal 2Q16. The company’s net income, EPS (earnings per share) of its Class A common stock, and EPS of its Class B convertible common stock rose to $358.9 million, $1.75, and $1.61, respectively, in fiscal 2Q17, compared to $302.4 million, $1.49, and $1.38, respectively, in fiscal 2Q16.

The company reported non-GAAP (generally accepted accounting principles) EPS of $1.77 in fiscal 2Q17, a rise of 13.5% over fiscal 2Q16.

STZ’s cash and cash equivalents and inventories rose 113.4% and 0.19%, respectively, between fiscal 4Q16 and fiscal 2Q17. Its current ratio rose to 1.4x, and its debt-to-equity ratio fell to 1.47x in fiscal 2Q17, compared to 1.3x and 1.54x, respectively, in fiscal 4Q16.

Projections

Constellation Brands has made the following projections for fiscal 2017:

  • net sales growth of the Beer segment in the range of 16%–17%, including an incremental benefit from its Ballast Point acquisition
  • net sales growth of its Wine & Spirits business in the mid-single-digit range and operating income growth in the mid- to high single-digit range
  • EPS of $6.25–$6.40 on a reported basis and $6.30–$6.45 on a comparable basis

Next, we’ll discuss Hormel Foods (HRL).

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