It was a great investor day for beer and beverage stock Constellation Brands (NYSE:STZ), who offered up some crucial updates, as well as a plan to carry on with its stock buyback plan. The news out of the event was sufficient to inspire the investors, and sent shares up an extra 2% going into the closing minutes of Thursday’s trading session.
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The outlook was about as optimistic as anyone could have asked for. Constellation Brands looks for net sales growth between 7% and 9% for this year, and for the beer business, operating margins between 39% and 40%. There’s also an expansion plan in the works thanks to the rising tide of the beer business. Meanwhile, the wine and spirits business is making gains, though not quite as pronounced as those seen in the beer sector. Wine and spirits should produce between 1% and 3% net sales growth, and operating margin improvements between 25% and 26% over the not-too-distant future.
Perhaps even bigger, as far as investors were concerned, was the news that Constellation is augmenting its stock buyback fund with an extra $2 billion. Right now, Constellation is making hay while the sun shines. It’s got the number one beer brand in the United States right now, thanks to Anheuser-Busch InBev (NYSE:BUD) and the still-ongoing troubles over Dylan Mulvaney. Anheuser-Busch lost another 13% in revenue, reports note, and that continuing decline is giving Constellation the cash boost it needs to stage buybacks and expand operations.
Is Constellation Brands Stock a Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on STZ stock based on 15 Buys and three Holds assigned in the past three months, as indicated by the graphic below. Furthermore, the average STZ price target of $292 per share implies 22.51% upside potential.
