TheStreet Ratings quantitative stock model maintains a Buy recommendation on Constellation Brands (STZ) . Since the stock was upgraded to Buy from Hold on August 3, 2010, the shares have soared by more than 12 times in value, rising as much as 1,173.4%.
All the stocks covered by TheStreet Ratings are evaluated daily by our quantitative model reviewing both fundamental analysis of the latest financial statements and technical analysis of share movements. If the weak stock performance on Wednesday from Constellation Brands is established as a new technical trend, the stock would be in jeopardy of an impending downgrade.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate CONSTELLATION BRANDS as a Buy with a ratings score of A-. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, expanding profit margins, good cash flow from operations and compelling growth in net income. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.
Highlights from the analysis by TheStreet Ratings goes as follows:
- The revenue growth came in higher than the industry average of 6.8%. Since the same quarter one year prior, revenues slightly increased by 6.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Beverages industry and the overall market, CONSTELLATION BRANDS's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- The gross profit margin for CONSTELLATION BRANDS is rather high; currently it is at 55.41%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 36.33% significantly outperformed against the industry average.
- Net operating cash flow has increased to $504.00 million or 32.07% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -10.51%.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Beverages industry. The net income increased by 86.6% when compared to the same quarter one year prior, rising from $398.50 million to $743.80 million.
- You can view the full analysis from the report here: STZ
-- Reported by Kevin Baker in Palm Beach Gardens, FL