Markets are rocking and rolling, up at all-time highs with no signs of stopping. Of course, we all know that it can’t last forever. And when it comes time to pay the piper, the brutality will be swift. During that time, it’s best to find stocks with strong earnings trends which have retreated in price. You won’t want to be left holding the bag in a stock that’s down in price, and has seen its earnings move in the wrong direction.
Today’s Bear of the Day is a stock that has seen its earnings estimates move in the wrong direction. I’m talking about Zacks Rank #5 (Strong Sell) Constellation Brands (STZ). Constellation Brands is a leading producer and marketer of alcoholic beverages, specializing in beer, wine, and spirits. The company owns popular beer brands like Corona, Modelo, and Pacifico in the U.S., along with a premium wine and spirits portfolio that includes Robert Mondavi, Kim Crawford, and Svedka Vodka. Constellation focuses on brand innovation, strategic acquisitions, and premiumization to drive growth in the beverage alcohol industry.
Constellation Brands is not in the good graces of our Zacks Rank. The reason is that nine analysts have cut their earnings expectations for the current year over the last sixty days, while eight have done so for next year. The bearish moves have dropped our Zacks Consensus Estimates for the current year from $13.72 to $13.50 while next year’s number is off from $15.02 to $14.44.
From a valuation perspective, the good news for investors is that Constellation is trading at 12x earnings. That’s cheaper than the industry average of 12.8x. If the company can right the ship and hold earnings steady, there’s a real chance at recovery.
Constellation is in the Beverages – Alcohol industry which ranks in the Bottom 10% of our Zacks Industry Rank. There is one name in the industry which is in the good graces of our Zacks Industry Rank. That’s Zacks Rank #2 (Buy) Kirin (KNBWY). There are several Zacks Rank #3 (Hold) stocks including Molson Coors (TAP).
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Molson Coors Beverage Company (TAP) : Free Stock Analysis Report
Constellation Brands Inc (STZ) : Free Stock Analysis Report
Kirin Holdings Co. (KNBWY) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
