Can Corona Beer Stock Make a Comeback?

Constellation Brands, Inc. (NYSE:STZ) is one of the largest alcoholic beverage companies in the United States. STZ primarily produces and markes beer, wine, and spirits. Constellation Brands has about 40 facilities and approximately 10,000 employees. The alcohol company also has more than 100 brands in its portfolio, including Corona. This morning STZ is trading up 0.01% at $219.57.

Constellation Brands stock has increased approximately 27% in price year-over-year and 37% since bottoming at a five-year low of $160.63 last October. However, shares of STZ remain flat year-to-date and down by10% since reaching a record high of $244.75 in February. Moreover, Constellation Brands offers a forward dividend of $3.04 and a dividend yield 1.39%.

STZ has outperformed earnings expectations on three of its last four earnings reports. For Q3 of 2020, Constellation Brands beat analysts’ estimates by a margin of $0.25. For Q4 of 2020, STZ beat expectations by a margin of $0.70. For Q1 of 2021, Constellation Brands beat estimates by a margin of $0.27. For Q2 of 2021, STZ missed expectations by a alight margin of $0.01.

From a fundamental perspective, Constellation Brands stock is certainly not the safest stock to own right now, but it does have some merits worth discussing. Perhaps the alcohol company’s biggest selling point is its consistent revenue growth. Despite the ongoing COVID-19 pandemic, Constellation Brands' revenues are still up 4% since fiscal 2020 and have increased 14% since fiscal 2018.

In the options pits, an unwinding of pessimism could vault the security higher. This is per Constellation's Schaeffer's put/call open interest ratio (SOIR) of 1.17, which ranks in the second highest annual percentile. This indicates short-term options traders are extremely put-biased.

As far as valuation goes, Constellation Brands stock currently trades at a high price-earnings ratio of 33.55. However, STZ's forward price-earnings ratio of 21.55 suggests a big improvement in the company’s earnings, making Constellation Brands stock a potential recovery play worth considering.