NEW YORK ( TheStreet) -- Constellation Brands (NYSE: STZ) has been reiterated by TheStreet Ratings as a buy with a ratings score of B. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance 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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- STZ's revenue growth has slightly outpaced the industry average of 1.2%. Since the same quarter one year prior, revenues slightly increased by 6.1%. 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 78.61%, 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.
- CONSTELLATION BRANDS's earnings per share declined by 28.9% 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).
- 42.56% 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, STZ's net profit margin of 7.85% is significantly lower than the industry average.
- Currently the debt-to-equity ratio of 1.69 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Even though the debt-to-equity ratio is weak, STZ's quick ratio is somewhat strong at 1.33, demonstrating the ability to handle short-term liquidity needs.
--Written by a member of TheStreet Ratings Staff.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.