Constellation Brands Upped to Outperform - Analyst Blog
January 23 2013 - 4:30AM
Zacks
On Jan 22, we upgraded the largest
wine company in the world, Constellation Brands Inc.
(STZ) to Outperform based on the
company’s strong third quarter fiscal 2013 results and increased
visibility on the Crown deal, which is expected to close during the
first quarter of calendar year 2013.
Why the
Upgrade?
Constellation Brands posted another
strong quarter, with a positive earnings surprise of 14.6%. The
company’s third-quarter earnings came in at 63 cents a share, up
21% from the year-ago quarter’s earnings, marking the fourth
consecutive quarter of positive earnings surprises with an average
beat of 32.5%. Following the strong results, the company raised its
fiscal 2013 adjusted earnings guidance to $2.10–$2.20 per share
from its earlier projection of $2.00–$2.10 per share.
Following the release of third
quarter results, the Zacks Consensus Estimate for the fourth
quarter and fiscal 2013 increased by 7.1% and 4.8% to 45 cents and
$2.18, respectively.
The strong positive bias on this
Zacks Rank #2 (Buy) company comes from its continued focus on brand
building initiatives and product innovations in its wine and
spirits business. These efforts are expected to drive the company’s
revenues. Owing to its strategic endeavors, the company is
witnessing robust depletion trends and increasing market share in
the U.S. wine and spirits category. Moreover, the company is
enhancing its points of distribution at retail and is well
executing its strategic merchandising initiatives that will
facilitate it to augment sales.
Other Stocks to
Consider
Besides Constellation Brands, other
stocks in the beer and wine industry that are performing well
include Boston Beer Co. Inc. (SAM) and
Compania Cervecerias Unidas S.A. (CCU), both
carrying a Zacks Rank #1 (Strong Buy). Brown-Forman
Corporation (BF.B), which holds a Zacks Rank #2, is also
worthy of a consideration.
BROWN FORMAN B (BF.B): Free Stock Analysis Report
CERV UNIDAS-ADR (CCU): Free Stock Analysis Report
BOSTON BEER INC (SAM): Free Stock Analysis Report
CONSTELLATN BRD (STZ): Free Stock Analysis Report
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