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.
