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Constellation Brands (STZ) Looks Attractive: Time to Buy?

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Going with the strategy of riding the winners and selling the losers is likely to be profitable for prudent investors. Talking of winners, alcohol-beverage company Constellation Brands Inc. (STZ - Free Report) is one of the first to come to mind as the company has seen its stock price jump 7.7% on a year-to-date basis and 10.9% over the past one year. Let’s explore what’s been driving this Zacks Rank #2 (Buy) stock.

CONSTELLATN BRD Price and Consensus


The Growth Drivers

Armed with a formidable portfolio of well-known brands, Constellation Brands is the largest wine company in the world. Also, it has a dominant position in the premium wine and beer segment in the U.S. The company’s consistent focus on brand building and its initiatives to include new products in its wine and spirits business are the key revenue drivers for the stock.

As evidence, the company recently undertook acquisitions of the Obregon brewery from Grupo Modelo, the Ballast Point craft beer, premium wine brands from Charles Smith Wine; High West Distillery and The Prisoner Wine Company brands portfolio, among others. These buyouts highlight Constellation Brands’ focus on expanding operations directed toward achieving business growth.

Alongside, the company is making meaningful leadership changes in an attempt to bring about innovations and improve its operational activities. Also, it is focused on enhancing points of distribution at retail and effectively executing its strategic merchandising initiatives to boost sales.

Coming to financials, the company flaunts a spectacular history with regard to its sales and earnings. Incidentally, in second-quarter fiscal 2017, both the top and bottom lines registered double-digit growth and exceeded expectations. While the stellar quarter marked the company’s eighth consecutive earnings beat in a row, Constellation Brands has surpassed sales estimates for six straight quarters now.

Further, management raised its fiscal 2017 earnings outlook following the splendid quarter. The company also raised the lower end of its beer sales guidance for the same time frame, reflecting further confidence in its future performance. Thanks to these factors, estimates for fiscal 2017 have been trending upward, since the earnings announcement.

All said, we believe that Constellation Brands’ sound cash flows, fundamental strength and superb performance history speak volumes about its future potential.

Stocks to Consider

Other well-ranked stocks in the consumer-staples space include Edgewell Personal Care Company (EPC - Free Report) , with a Zacks Rank #1 (Strong Buy), Blue Buffalo Pet Products, Inc. and Spectrum Brands Holdings, Inc. (SPB - Free Report) , each with a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Edgewell Personal Care has to its credit a decent earnings trend as the company delivered a positive earnings surprise in three out of the past four quarters. Moreover, its long-term EPS growth rate of 8.1% and positive estimate revisions over the past 7 days bode well.

Blue Buffalo, with a long-term EPS growth rate of 16%, has seen positive estimate revisions for 2016, over the past 7 days. The company also flaunts a solid earnings surprise history.

Spectrum Brands, with a long-term EPS growth rate of 13.3%, has delivered back-to-back positive earnings surprises in the last two quarters.

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