Can Constellation Brands Stock Sustain Its Strong Momentum?



Impressive YTD rise

As of December 26, Constellation Brands (STZ) stock has risen 47.1% to $225.51 on a YTD (year-to-date) basis. The leading beer, wine, and spirits producer has outperformed the broad market represented by the S&P 500 Index, which has risen 19.7% on a YTD basis.

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Comparison with peers

As of December 26, the stocks of Anheuser-Busch InBev (BUD), Molson-Coors Brewing (TAP), and Brown-Forman (BF.B) have moved 5.7%, -15.9%, and 52.5%, respectively. In comparison, the Consumer Staples Select Sector SPDR Fund (XLP) has risen 10.2% on a YTD basis.

Recent performance

Constellation Brands exceeded consensus analysts’ sales and earnings estimates for fiscal 2Q18, which ended on August 31, 2017. The company also raised its earnings guidance for full-year fiscal 2018 following strong results of the beer segment in fiscal 2Q18. Constellation Brands stock has risen 7.8% since the announcement of its fiscal 2Q18 results in October. A focus on premium beer, wine, and spirits products has been a major growth driver for Constellation Brands. The company’s beer portfolio comprises popular brands like Corona Extra, Corona Light, Modelo Especial, Modelo Negra, and Pacifico.

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The company is trying to further strengthen its position in high-growth product categories through strategic acquisitions. In October 2017, the company announced the acquisition of a minority stake in the Canada-based Canopy Growth Corporation. Canopy Growth is a leading provider of medicinal cannabis (marijuana) products.

Upcoming results

Constellation Brands is scheduled to announce its fiscal 3Q18 results on January 5, 2018. In this earnings preview series, we’ll discuss the expectations from Constellation Brands’ sales, margins, and earnings. The series will also assess focus on the company’s valuation and analysts’ recommendations for Constellation Brands stock.

We’ll start with a discussion of analysts’ sales outlook in the next part of this series.


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