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 (
) 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, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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Highlights from the ratings report include:
- STZ's revenue growth has slightly outpaced the industry average of 3.3%. Since the same quarter one year prior, revenues rose by 10.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Compared to its closing price of one year ago, STZ's share price has jumped by 122.04%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- Net operating cash flow has increased to $167.30 million or 16.74% when compared to the same quarter last year. Despite an increase in cash flow, CONSTELLATION BRANDS's cash flow growth rate is still lower than the industry average growth rate of 54.31%.
- 42.20% is the gross profit margin for CONSTELLATION BRANDS which we consider to be strong. Regardless of STZ's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 11.74% trails the industry average.
- CONSTELLATION BRANDS's earnings per share declined by 15.7% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, CONSTELLATION BRANDS reported lower earnings of $2.06 versus $2.14 in the prior year. This year, the market expects an improvement in earnings ($2.80 versus $2.06).
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 35% year to date as of the close of trading on Monday.
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--Written by a member of TheStreet Ratings Staff.
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