Will Constellation Brands’ stock price recover after it drops 6% on first quarter results?

Does Constellation Brands, Inc. (NYSE:STZ) offer investment appeal for the long run?

Constellation Brands
Constellation Brands

The Constellation Brands, Inc. (NYSE:STZ) stock price has moved around 6% lower today following the release of its first quarter results. The company has been able to make further progress with its strategy in my view, and appears to have solid growth potential over the long run.

Net sales moved 6% higher versus the comparable period, while operating income was down by 4% on a comparable basis. Comparable basis EPS of $2.20 was down 5%, which is lower than the stock market forecast of around $2.43.

The period saw Constellation Brands make planned investments in areas such as innovation for its key brands, digital, enablement, emerging opportunities and efficiencies. While it may take time for these investments to have a clear impact on its top and bottom lines, I feel that the company’s long-term approach could be highly rewarding in the coming years.

The company has also continued to innovate. It has introduced new products such as Corona Premier and Familiar. They helped to drive industry-leading depletion growth of 9% for the company’s beer business during the quarter.

Looking ahead, Constellation brands has reaffirmed its comparable basis EPS outlook of $9.40-$9.70 for the full year. It has also reaffirmed its 2019 operating cash flow target of around $2.45 billion, as well as its free cash flow projection of $1.2-$1.3 billion.

In my view, the company is making good progress with its overall strategy. Its innovation and the investment it is making in its business and brands could put it on a firmer footing to deliver growth in the long run.

In what remains a highly competitive alcoholic beverage space, the stock appears to offer an upbeat investment outlook to my mind. As a result, and even after it has fallen by over 6% following its results release today, I feel it could have investment potential for the long run.








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Robert Stephens is a CFA Charterholder and works as an Equity Analyst. He is a keen private investor and has bought and sold stocks for 15 years, investing in a range of sectors and markets. He has previously written for Seeking Alpha and The Motley Fool, and now runs his own business. If you would like to contact Robert, please email [email protected] or contact him via one of the other methods on the 'Contact Us' page