Zacks Investment Research Lowers Constellation Brands (STZ) to Sell

Constellation Brands (NYSE:STZ) was downgraded by Zacks Investment Research from a “hold” rating to a “sell” rating in a research report issued to clients and investors on Monday.

According to Zacks, “Constellation Brands lagged the industry in the past month as it slashed earnings outlook for fiscal 2019. The soft view stems from expectations of higher interest expense and softness in wine and spirits business. Notably, incremental interest expense related to investment in Canopy Growth is likely to reduce earnings per share by 25 cents in fiscal 2019. Further, lowered sales and operating income view for the wine and spirits segment is likely to weigh on earnings. Moreover, higher transportation, operating and marketing expenses hurt operating margin for beer segment in fiscal third quarter, which is likely to continue in fiscal 2019. However, the company is gaining from constant brand-building efforts, acquisitions and e-commerce initiatives. Solid earnings and sales surprise history also reflects its inherent strength. The company is also poised to gain from exposure in the cannabis space with its investment in Canopy Growth.”

Several other equities analysts have also issued reports on the company. Goldman Sachs Group upgraded Constellation Brands from a “neutral” rating to a “buy” rating and set a $211.00 target price for the company in a research report on Thursday. Jefferies Financial Group restated a “buy” rating and set a $289.00 target price on shares of Constellation Brands in a research report on Friday, December 7th. OTR Global upgraded Constellation Brands to a “positive” rating in a research report on Friday, September 28th. Wells Fargo & Co boosted their target price on Constellation Brands from $270.00 to $275.00 and gave the stock an “outperform” rating in a research report on Friday, October 5th. Finally, Pivotal Research restated a “buy” rating and set a $300.00 target price (up from $265.00) on shares of Constellation Brands in a research report on Friday, October 5th. Two analysts have rated the stock with a sell rating, seven have assigned a hold rating, seventeen have assigned a buy rating and two have given a strong buy rating to the stock. The stock currently has an average rating of “Buy” and an average price target of $228.09.

Constellation Brands stock opened at $159.21 on Monday. The stock has a market cap of $28.60 billion, a PE ratio of 18.26, a P/E/G ratio of 1.57 and a beta of 0.38. Constellation Brands has a 1 year low of $150.37 and a 1 year high of $236.62. The company has a debt-to-equity ratio of 0.80, a current ratio of 1.66 and a quick ratio of 0.76.

Constellation Brands (NYSE:STZ) last posted its earnings results on Wednesday, January 9th. The company reported $2.37 earnings per share (EPS) for the quarter, topping the Thomson Reuters’ consensus estimate of $2.04 by $0.33. The company had revenue of $1.97 billion during the quarter, compared to analyst estimates of $1.91 billion. Constellation Brands had a return on equity of 18.27% and a net margin of 35.27%. The company’s revenue for the quarter was up 9.5% compared to the same quarter last year. During the same period in the previous year, the company earned $2.00 EPS. Equities analysts forecast that Constellation Brands will post 9.25 EPS for the current year.

In related news, CEO Robert Sands sold 151,060 shares of the business’s stock in a transaction that occurred on Monday, October 22nd. The stock was sold at an average price of $223.67, for a total value of $33,787,590.20. Following the completion of the transaction, the chief executive officer now directly owns 737,607 shares in the company, valued at approximately $164,980,557.69. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which is available through the SEC website. Also, Chairman Richard Sands sold 148,773 shares of the business’s stock in a transaction that occurred on Monday, October 22nd. The shares were sold at an average price of $223.69, for a total value of $33,279,032.37. Following the completion of the transaction, the chairman now owns 346,525 shares of the company’s stock, valued at $77,514,177.25. The disclosure for this sale can be found here. Insiders sold a total of 578,723 shares of company stock valued at $129,438,449 over the last quarter. 15.80% of the stock is owned by insiders.

A number of hedge funds and other institutional investors have recently added to or reduced their stakes in STZ. Carroll Financial Associates Inc. lifted its stake in Constellation Brands by 132.0% in the 4th quarter. Carroll Financial Associates Inc. now owns 283 shares of the company’s stock valued at $48,000 after acquiring an additional 161 shares in the last quarter. Atlantic Trust LLC bought a new stake in Constellation Brands in the 2nd quarter valued at approximately $114,000. TLP Group LLC bought a new stake in Constellation Brands in the 3rd quarter valued at approximately $136,000. Truvestments Capital LLC bought a new stake in Constellation Brands in the 3rd quarter valued at approximately $137,000. Finally, Benjamin F. Edwards & Company Inc. lifted its stake in Constellation Brands by 49.3% in the 3rd quarter. Benjamin F. Edwards & Company Inc. now owns 787 shares of the company’s stock valued at $170,000 after acquiring an additional 260 shares in the last quarter. Hedge funds and other institutional investors own 72.56% of the company’s stock.

About Constellation Brands

Constellation Brands, Inc, together with its subsidiaries, produces, imports, and markets beer, wine, and spirits in the United States, Canada, Mexico, New Zealand, and Italy. The company sells wine across various categories, including table wine, sparkling wine, and dessert wine. It provides beer primarily under the Corona Extra, Corona Light, Modelo Especial, Modelo Negra, Modelo Chelada, Pacifico, and Victoria brands, as well as Funky Buddha, Obregon Brewery, and Ballast Point brands.

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