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Constellation Brands Inc. Stock Buy Recommendation Reiterated (STZ)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK (TheStreet) -- Constellation Brands (NYSE:STZ) has been reiterated by TheStreet Ratings as a buy with a ratings score of A-. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, expanding profit margins, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

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Highlights from the ratings report include:

  • STZ's revenue growth has slightly outpaced the industry average of 0.5%. Since the same quarter one year prior, revenues slightly increased by 9.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 95.42% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, STZ should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • 44.80% is the gross profit margin for CONSTELLATION BRANDS which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 14.27% trails the industry average.
  • CONSTELLATION BRANDS has improved earnings per share by 11.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CONSTELLATION BRANDS reported lower earnings of $2.14 versus $2.62 in the prior year. This year, the market expects an improvement in earnings ($2.17 versus $2.14).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Beverages industry average. The net income increased by 4.5% when compared to the same quarter one year prior, going from $104.80 million to $109.50 million.

Constellation Brands, Inc. produces and markets beverage alcohol in the United States and internationally. Constellation has a market cap of $7.8 billion and is part of the consumer goods sector and food & beverage industry. The company has a P/E ratio of 22.00, above the S&P 500 P/E ratio of 18.00. Shares are up 39.6% year to date as of the close of trading on Thursday.

You can view the full Constellation Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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