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Constellation Brands (STZ) stock is down around 1% this year, which lags the S&P 500’s roughly 8% climb. The seller of Corona and other alcoholic beverages faces a changing market that has prompted Constellation to dive into the booming marijuana industry.
Recent News & Overview
Constellation’s portfolio of brands includes import beer powers Corona and Modelo, Kim Crawford and Robert Mondavi wines, as well as Casa Noble tequila and Svedka vodka. The New York-based company made headlines when it announced this summer its nearly $4 billion investment in Canadian marijuana company Canopy Growth Corp. (CGC). The deal allows Constellation to take a controlling stake in the firm in the future.
Constellation plans to roll nonalcoholic, cannabis-infused drinks in Canada along with other legal markets. Some analysts have noted that the deal adds to Constellation’s relatively significant debt load. But beyond Canada, investors should note that the legalization of marijuana has happened relatively quickly in the U.S. on a state-by-state basis.
The beer and wine power could see its Canopy investment turn out to be a major success, but it seems far too early to tell. With that said, Constellation is coming off a solid quarter that saw its sales climb 9% to $2.53 billion. The company also raised its fiscal year earnings outlook and reaffirmed its sales outlook for both beer as well as wine and spirits.
Stock Price Movement
Now let’s look at Constellation’s recent performance to help investors understand where STZ stands at the moment. Shares of STZ have soared roughly 270% over the last five years, which destroys the S&P’s 75% jump. If we narrow our focus, Constellation and the index are neck and neck, with STZ up roughly 32% over the past 24 months and the index up 33%.
But we can see that STZ has outperformed its industry for some time now. Shares of Constellation have climbed roughly 8% over the last 12 months, compared its industry’s nearly 15% decline. Constellation’s industry includes Anheuser Busch InBev (BUD), Molson Coors (TAP), Boston Beer Company (SAM), and others.
Outlook & Earnings Trends
Looking ahead, our current Zacks Consensus Estimate is calling for Constellation’s quarterly revenues to pop 6.8%. Meanwhile, its full-year revenues are projected to jump 7.3% to reach $8.14 billion.
Moving on, STZ’s adjusted quarterly earnings are projected to climb by just 3%, while its fiscal year EPS figure is expected to jump 7.6%. With that said, Constellation’s quarterly earnings revision picture has turned negative.