Constellation Brands Inc. (NYSE: STZ)
Constellation Brands, Inc. is an American producer and marketer of beer, wine, and spirits. Constellation is the largest beer import company in the US, measured by sales, and has the third-largest market share of all major beer suppliers, it is a Fortune 500 company as well. Some of its most renowned products are Corona and Modelo. The company has its headquarters in New York, USA and was founded by Marvin Sands in 1945. Having seen great results in the first quarter and a positive outlook for the future, analysts see this stock doing well very soon. With an increase in mentions by a massive 140% over the last day, investors are now prompted to wonder what gives this company such hype. Constellation brands shares currently trade at $243 per share.
There are multiple reasons why this stock should be on your radar at the moment, some of them are as follows.
Market share wins - Constellation achieved a 9% boost in depletions, a measure of consumer sales, as it gained market share in both the premium and the broader beer segments. Across the portfolio, overall sales were up 17%.
In addition, operating cash flow was up 6% to $758 million, helping fund dividend payments and accelerating stock buyback spending.
The beer business is still on track to grow sales by between 7% and 9% and boost profits although at a slightly slower rate.
Free cash flow hit $1.7 billion last year, which helped persuade management to invest aggressively in areas like the brewery network. These have shown demand despite the growth of alternatives like seltzers.
Profitability rose last quarter as the company squeezed more efficiency from its vertically integrated supply chain. Its ownership of key parts of that network, including breweries and glass manufacturing plants, insulates it from some of the surprise earnings hits that rivals have seen.
Although Constellation Brands, Inc has generated a lot of positive hype, there is still a reason to be precautious before taking a position in the company. Here is one of them.
Constellation Brands wasn't immune to the cost surge hurting most businesses' profitability. Overall, operating income rose just 10% to trail the company's 17% sales boost.
The balance between growth, profitability gains, and direct shareholder returns makes Constellation Brands such a compelling stock to consider owning as part of a diverse portfolio of well-run businesses. However, there are still concerns that the company may not show as much profitability in the very near future considering its expansion and cost surges. Nevertheless, Constellation Brands has solid fundamentals and would be a great company to take a position in.
HypeIndex is an AI platform that detects Hype in stocks and cryptos before it moves the market, providing reliable early detection for profitable investment opportunities.
The algorithm for our proprietary HypeIndex score is based on sentiment analysis, data science and machine learning.