Constellation Brands Gets Upgraded to ‘Buy’



Price movement

Constellation Brands (STZ) has a market cap of $31.8 billion. It rose 2.1% to close at $157.99 per share on January 4, 2017. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 4.5%, 8.2%, and 3.1%, respectively, on the same day.

STZ is trading 3.5% above its 20-day moving average, 1.3% above its 50-day moving average, and 0.69% below its 200-day moving average.

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Related ETF and peers

The iShares Russell 3000 (IWV) invests 0.12% of its holdings in Constellation Brands. The YTD price movement of IWV was 1.5% on January 4, 2017.

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

  • Anheuser-Busch InBev (BUD): $175.9 billion
  • Molson Coors Brewing (TAP): $21.5 billion

STZ’s rating

On January 4, 2017, Bank of America Merrill Lynch upgraded Constellation Brands’ rating to a “buy” from “neutral” and set the stock’s price target at $175 per share.

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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 $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. That compares 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.


Constellation Brands has made the following projections for fiscal 2017:

  • net sales growth of the Beer segment of 16.0%–17.0%, including an incremental benefit from its Ballast Point acquisition
  • net sales growth of its Wine and Spirits division in the mid-single-digits and operating income growth in the mid- to high-single-digits
  • EPS of $6.25–$6.40 on a reported basis and $6.30–$6.45 on a comparable basis

In the next part, we’ll look at Coach (COH).


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