With a market cap of $43.5 billion, Victor, New York-based Constellation Brands, Inc. (STZ) is a leading producer and marketer of beer, wine, and spirits. The company's diverse portfolio includes renowned brands like Corona, Modelo Especial, Kim Crawford, Meiomi, and SVEDKA Vodka, catering to wholesale distributors, retailers, and on-premise outlets.
Shares of the wine, liquor, and beer company have underperformed the broader market over the past 52 weeks. STZ has risen marginally over this time frame, while the broader S&P 500 Index ($SPX) has gained 31%. In 2024, shares of STZ are slightly down, compared to SPX’s 25.2% increase on a YTD basis.
Narrowing the focus, STZ has also lagged behind the Consumer Staples Select Sector SPDR Fund’s (XLP) 16.7% rise over the past 52 weeks and 13.6% return on a YTD basis.
Despite reporting better-than-expected Q2 adjusted EPS of $4.32, shares of Constellation Brands dipped 4.7% on Oct. 3 due to net sales of $2.9 billion missing the consensus mark. The wine and spirits segment faced a sharp 12% decline in sales to $388.7 million, a 9.8% drop in shipment volumes, and a significant $2.25 billion goodwill impairment, raising concerns about long-term challenges. Additionally, fiscal 2025 guidance forecasted a 4%-6% decline in wine and spirits sales and a 16%-18% drop in segment operating income, overshadowing growth in the beer business.
For the current fiscal year, ending in February 2025, analysts expect STZ’s EPS to grow 12.5% year-over-year to $13.57. The company’s earnings surprise history is promising. It beat the consensus estimates in the last four quarters.
Among the 19 analysts covering the stock, the consensus rating is a “Strong Buy.” That’s based on 14 “Strong Buy” ratings, one “Moderate Buy,” and four “Holds.”
This configuration is less bullish than three months ago, with 16 “Strong Buy” ratings on the stock.
On Nov. 19, Robert Ottenstein of Evercore ISI reiterated a “Buy” rating for Constellation Brands and set a price target of $300.
The mean price target of $292 represents a premium of 21.8% to STZ’s current levels. The Street-high price target of $325, implies a potential upside of 35.6% from the current price.
