Is Constellation Brands Stock Underperforming the Dow?
Constellation Brands, Inc. (STZ), with a market cap of $34.2 billion, produces, imports, markets, and sells beer, wine, and spirits in the United States, Canada, Mexico, New Zealand, and Italy. Founded in 1945, the Victor, New York-based company provides its products to wholesale distributors, retailers, on-premise locations, and state alcohol beverage control agencies.
Companies valued at more than $10 billion or more are generally considered “large-cap stocks”, and Constellation Brands fits this criterion perfectly. Having a leading position in the beverages industry, the company offers its products under various world-famous brands such as Corona, Modelo, Pacifico, Nelson's Green Brier, and SVEDKA.
Despite its strengths, STZ has declined 32.6% from its 52-week high of $274.87, recorded recently on Apr. 11, last year. Shares of STZ have declined 22.8% over the past three months, falling behind the broader Dow Jones Industrial Average’s ($DOWI) 6.2% fall during the same time frame.
Over the past six months, STZ shares declined 25.5%, underperforming DOWI’s 1.4% gain. Moreover, shares of STZ have fallen 29.3% over the past 52 weeks, compared to DOWI’s 6.9% rally in the same time frame.
STZ has been trading below its 200-day moving average since early-October, but over its 50-day moving average since early-March.
STZ’s underperformance can be traced back to a subdued consumer spending that impacted the company’s top-line growth, leading to a decline in their stock price. Amid declining sales and inflation concerns, the stock dipped 17.1% following a disappointing Q3 earnings release on Jan 10. The company’s net sales came in at $2.5 billion, and its EPS failed to surpass the Wall Street estimates by 2.7%.
Constellation Brands’ rival, Compañía Cervecerías Unidas S.A. (CCU), is in the lead, with its shares surging 40.7% over the past six months and 20.3% over the past 52 weeks.
However, analysts remain cautiously optimistic about its prospects. The stock has a consensus rating of “Moderate Buy” from 22 analysts in coverage. Its mean price target of $237.61 represents an upside of 28.3% from the current market prices.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.