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Constellation Brands (STZ) Gains As Market Dips: What You Should Know

Zacks Equity Research

In the latest trading session, Constellation Brands (STZ) closed at $205.75, marking a +0.32% move from the previous day. This move outpaced the S&P 500's daily loss of 0.01%. At the same time, the Dow added 0.06%, and the tech-heavy Nasdaq lost 0.06%.

Coming into today, shares of the wine, liquor and beer company had gained 1.71% in the past month. In that same time, the Consumer Staples sector gained 0.13%, while the S&P 500 gained 3.23%.

STZ will be looking to display strength as it nears its next earnings release, which is expected to be October 3, 2019. On that day, STZ is projected to report earnings of $2.61 per share, which would represent a year-over-year decline of 9.06%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $2.33 billion, up 1.42% from the year-ago period.

STZ's full-year Zacks Consensus Estimates are calling for earnings of $8.37 per share and revenue of $7.90 billion. These results would represent year-over-year changes of -9.81% and -2.61%, respectively.

Investors should also note any recent changes to analyst estimates for STZ. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.18% lower. STZ currently has a Zacks Rank of #3 (Hold).

Digging into valuation, STZ currently has a Forward P/E ratio of 24.52. Its industry sports an average Forward P/E of 24.25, so we one might conclude that STZ is trading at a premium comparatively.

Also, we should mention that STZ has a PEG ratio of 3.07. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Beverages - Alcohol industry currently had an average PEG ratio of 3.26 as of yesterday's close.

The Beverages - Alcohol industry is part of the Consumer Staples sector. This industry currently has a Zacks Industry Rank of 222, which puts it in the bottom 14% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.

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