Why Constellation Brands (STZ) Stock Is Up Today

NEW YORK (TheStreet) -- Shares of Constellation Brands  (STZ) are up 1.3% to $82.35 after the company reported that beer sales helped increase fiscal 2014 fourth quarter profit.

CEO Rob Sands said Constellation's purchase last year of Grupo Modelo's U.S. beer business from Anheuser-Bush InBev (BUD), which gave them rights to Corona and Modelo brands, helped the company's beer division perform better than projected last quarter,

The company's fourth-quarter net income nearly doubled to $157.2 million, with net sales surging 86% percent to $1.29 billion.

Excluding some items, the earnings were 81 cents a share. 

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In fiscal 2015, which ends next February, the company said it's is targeting mid-to-high single digit net sales growth for the beer segment.

In fiscal 2014, beer segment operating income totaled $773 million. That included 100% of Crown's operating income for the entire year and brewery profits since the date of acquisition in June 2013.

For fiscal 2015, the company expects beer segment operating income to grow in the low-to-mid 20% range. Excluding the anticipated brewery acquisition benefit, underlying operating income growth for the beer segment is expected to be in the 10%-12% range.

For the wine and spirits segment in fiscal 2015 the company expects net sales and operating income growth to be in the low-to-mid single digit range.

TheStreet Ratings team rates CONSTELLATION BRANDS as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate CONSTELLATION BRANDS (STZ) a BUY. 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 robust revenue growth, notable return on equity, reasonable valuation levels, solid stock price performance and compelling growth 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."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • STZ's very impressive revenue growth greatly exceeded the industry average of 4.0%. Since the same quarter one year prior, revenues leaped by 88.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 84.48% and other important driving factors, this stock has surged by 75.57% over the past year, outperforming the rise in the S&P 500 Index during the same period. 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.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Beverages industry and the overall market, CONSTELLATION BRANDS's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • 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 92.7% when compared to the same quarter one year prior, rising from $109.50 million to $211.00 million.
  • You can view the full analysis from the report here: STZ Ratings Report

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