What You Must Know Before Buying Constellation Brands Stock

A number of bear gaps have knocked STZ off its record high

facebook twitter linkedin

Constellation Brands, Inc. (NYSE:STZ) is up 0.4% to trade at t $226.64 at last check. Earlier this month, the beer, wine, and spirits name, which is the parent of brands such as Corona, Modelo, and SVEDKA Vodka, announced a C-suite shakeup. The company promoted Kris Carey to Executive Vice President and Chief Human Resources Officer, effective in May 2022.

On the charts, a number of bear gaps have knocked Constellation Brands stock off a Jan. 6, all-time high of $257.99. Plus, the 50-day moving average turned down several of the stock's rally attempts in February, and is still capping the equity's recent bounce off the $257 level. Year-to-date, STZ is down 9.7% 

STZ 50 Day

The brokerage bunch leans bullish towards the security. Of the 12 analysts in question, nine call STZ a "strong buy," while the 12-month consensus target price of $272.52 is a 20.2% premium to current levels.

At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), STZ's 10-day put/call volume ratio of 1.55 ranks higher than 83% of readings from the last year. This suggests puts have been picked up at a much quicker-than-usual clip over the past two weeks.

From a fundamental point of view, Constellation Brands stock offers little consistency or security, as well as an incredibly slow growth rate and an inflated valuation. STZ trades at a forward price-earnings of 17.54, which does not mean much considering its history.

In fact, Constellation Brands posted $11.8 million in net losses for 2020, which is roughly a $3.44 billion decrease compared to 2019. In addition, the company generated $52.9 million in net losses in the trailing 12-month period, or a $2.05 billion decrease in net income compared to 2021.

Constellation Brands stock has a rich price-sales ratio of 4.71 as well, which is only made worse by the fact the company has only grown annual revenues 7% since 2019. In addition, STZ's balance sheet is abysmal, with $361 million in cash and $10.9 billion in total debt.

Overall, the only positive is that analysts expect the alcohol concern to grow earnings by 15.8% and revenues by 7.2%. Still, the company will have to improve significantly before STZ can be considered a viable investment.


Special Offers from Schaeffer's Trading Partners