STZ Stock Forecast: Bullish Future For STZ

 

 

The article was written by Jordan Klotnick, a Financial Analyst at I Know First. He graduated from Monash University with a Bachelor’s in Business – Majoring in Marketing.

 

“You don’t have to be a genius or a visionary or even a college graduate to be successful. You just need a framework and a dream.” Michael Dell

STZ Stock Forecast

Summary

  • Improving Fundamental
  • Increasing Market Share
  • I Know First Algorithm Bullish Forecast for STZ

Background 

Constellation Brands, Inc., produces, imports and markets beer, wine and spirits in the US, Canada, Mexico, New Zealand and Italy. They sell wine across varying categories, these include table wine, sparkling wine and dessert wine. Its main brands comprise of: Arbor Mist, Black Box, Blackstone, Clos du Bois, Estancia, Franciscan Estate, Inniskillin, Kim Crawford, Mark West, Mount Veeder, Nobilo, Ravenswood, Rex Goliath, Robert Mondavi, Ruffino, Simi, Toasted Head, Wild Horse, Black Velvet Canadian Whisky, and SVEDKA Vodka. The company offers its products to wholesale distributors, on premise locations, retailers and government alcohol beverage control agencies. Constellation Brands, Inc. was founded in 1945 and is headquartered in Victor, New York.

Source: Cbrands

STZ Financials 

Constellation Brands, Inc. (STZ) has yielded investors nearly 700% in the past 5 years.  How has STZ managed to return investors with such a high yield? During the last 5 years, have posted high earnings per share (EPS) growth of 14.50% in the last 5 years. Although the price to book ratio of 4.61 is above the industry average of 1.77., sales year on average for the past 5 years remain in the double digit.

The latest financial results show a positive increase in revenue for the company through 2015-2017 thus far. With steady increase in each quarter every year, the company continue to post another quarter surpassing expectation. Fiscal year 2016, Q3 results revenue was $1,640(m) as shown below, compared to their Q3 fiscal 2017 of $1,810(m), increasing by over 10%.

Market Share Advantage

STZ has one of the most formidable portfolios of well-known brands, being one of the largest wine companies in the world. Additionally, they hold a dominant position in the premium wine and beer segment in the United States. All of this provides the company with a competitive advantage and bolsters their well-established position in the market.

The company focuses on brand building, strengthening its beer business and initiatives to include new products in the wine and spirits business. All of this are key growth drivers for the company. A recent buyout of Obregon Brewery from Grupo Modelo, in the company’s beer segment, will allow the company to serves its high-end Mexican beer portfolio. Further, the glass plant expansion is well on track. It’s expected to cater to more than 50% of the glass demand. Further, they made small investments in Catocin Creek Distilling Company and Bardstown Bourbon Company, during their third quarter of fiscal 2017.

Constellation Brands appears compelling from the earnings perspective as well. Their earnings have outpaced Zacks Consensus Estimate in nine straight quarters. They have also surpassed sales estimates in the trailing five quarters.

Source: Yahoo Finance

Conclusion 

STZ looks forward to strong financial results with their latest results set to be released early April. With analysts expecting serious growth in the coming years, STZ seems to be in a strong position financially. Finally, STZ shares have been given a strong 1 year bullish signal of 223.26 by I Know First’s self-learning algorithm.

I Know First Algorithm Bullish Forecast for STZ

I Know First currently maintains a bullish stance on STZ with a signal strength of 223.26 and predictability of 0.49 for the one year forecast.

Explanation of the I Know First Algorithm Heatmap 

The sign of the signal tells in which direction the asset price is expected to go (positive = to go up = Long, negative = to drop = Short position), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities.

Predictability is the actual fitness function being optimized everyday and can be simplified explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm, allowing the user to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.

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