Shares of Constellation Brands Inc. (STZ - Analyst Report) soared to a new 52-week high of $60.59 on Thursday, Oct 3, as the company benefited from the strong second-quarter fiscal 2014 performance and an upbeat outlook. Further, a consistent rise in the volumes traded led to the stock’s price appreciation. Average volume of shares traded over the last 3 months stands at approximately 1,574K.
This Zacks Rank #2 (Buy) beverage company closed trade at $60.15 on Oct 3, marking a solid year-to-date return of approximately 60.1%.
Moreover, the company currently trades at a forward P/E of 21.3x, a 7.6% premium to the industry group average of 19.8x. The last traded price is 8.7% below the Zacks Consensus average analyst price target of $65.40. Additionally, the company’s long-term estimated earnings per share (EPS) growth rate is 14.4%.
An impressive record of beating the quarterly earnings expectations, sustained focus on brand building as well as initiatives to introduce new products in its wine and spirits business are the major attributes that drove the shares of Constellation Brands to the new high.
The recent second-quarter fiscal 2014 results have added to Constellation Brands’ streak of upbeat performances. Constellation Brands posted adjusted earnings of 96 cents per share that rose from 71 cents in the year-ago quarter and surpassed the Zacks Consensus Estimate of 89 cents by 7.9%, primarily driven by consolidation of the company’s newly acquired Crown Imports business. In the last 5 quarters, the company has beaten the Zacks Consensus Estimates by an average of 10.2%.
Net sales in the quarter rose over twofold year over year to $1,459.8 million. The year-over-year increase in top line was primarily attributable to the full consolidation of Crown Import business.
Considering the positive impact from the recent acquisition of Grupo Modelo and strong second-quarter results, management raised its guidance for fiscal 2014. Constellation Brands now expects fiscal 2014 adjusted earnings to come in the range of $2.80–$3.10 per share, compared with $2.60–$2.90 projected earlier. On a reported basis, earnings per share in fiscal 2014 are now anticipated to be in the range of $9.30–$9.60.
Further, owing to its strategic endeavors, the company is witnessing strong depletion trends and increasing market share in the U.S. wine and spirits category. Moreover, Constellation Brands is enhancing its points of distribution in retail and is effectively executing strategic merchandising initiatives to boost sales.
The company’s strategic initiatives to strengthen its foothold in the U.S. wine industry and efforts to increase its portfolio of brands are stimulating growth. This is well evident from the company’s recent acquisition of Grupo Modelo SAB de C.V.’s U.S. beer business from Anheuser-Busch InBev.
Apart from Constellation Brands, other stocks such as Energen Corp. (EGN - Snapshot Report), Envestnet,Inc. (ENV - Snapshot Report) and Ferro Corp. (FOE - Snapshot Report) achieved new 52-week highs of $80.38, $32.13 and $9.74, respectively.