Constellation Brands, Inc. (STZ): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report
Summary:
Gaining from the strength of its beer business, Constellation Brands posted solid third-quarter fiscal 2015 results, wherein both top and bottom lines surged year over year and beat the Zacks Consensus estimate. We remain optimistic on the company's consistent focus on brand building and efforts to include new products in its wine and spirits businesses, which are key growth drivers for the stock. Also, owing to its strategic endeavors, the company is witnessing steady depletion trends and an increasing market share in the U.S. wine and spirits category. Therefore, we are optimistic on the company achieving its recently raised fiscal 2015 targets. However, we are slightly skeptical about the stock's future performance because of the rise in grape prices as well as its highly leveraged balance sheet. Hence, we maintain our Neutral recommendation on the stock.
Overview:
Founded in 1945 and headquartered in Victor, NY, Constellation Brands Inc. is the largest wine company in the world with a strong portfolio of premium wine brands, complemented by spirits, imported beer and other select beverage alcohol products. The company conducts its operations in 3 core markets, which are the U.S., Canada and New Zealand.
Constellation Brands primarily focuses on premium wine brands, which include Robert Mondavi, Clos du Bois, Arbor Mist and Blackstone. The company also owns the Svedka and Black Velvet spirit brands. In Jun 2013, Constellation Brands acquired Grupo Modelo SAB de CV, a Mexico-based producer of beers in order to import brands such as Corona Extra, Corona Light and Modelo Especial.
The company's products are sold through wholesale distributors, state and provincial alcoholic beverage control agencies as well as importers. The company also sells its products directly to retailers and through on-premise outlets.
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