On Friday, BMO (TSX:BMO) Capital Markets updated its outlook on Constellation Brands, Inc. (NYSE:STZ), increasing the share price target to $315 from the previous $290 while maintaining an Outperform rating. This adjustment follows the company's reported earnings for the fourth fiscal quarter of 2024, which surpassed the consensus estimates.
Constellation Brands announced its fourth fiscal quarter earnings per share (EPS), excluding Canopy-related figures, at $2.30. This figure includes an $0.08 one-time write-off but still exceeded the consensus prediction of $2.11. The beat was attributed to robust beer sales coupled with reduced corporate expenses, interest, and taxes, which balanced out weaker performance in the Wine & Spirits segment.
Looking ahead, the company has issued guidance for fiscal year 2025 with an EPS forecast, excluding Canopy, of between $13.50 and $13.80. This projection is notably higher than the consensus estimate of $13.45. The optimistic guidance is supported by expectations of continued strong beer sales growth and margin expansion, along with lower corporate costs, interest, and taxes.
BMO Capital Markets has expressed confidence in Constellation Brands' trajectory, citing the company's momentum in the beer market and potential for above-average growth. The firm's analyst also pointed out the attractiveness of the stock's valuation, noting its sub-20x price-to-earnings (P/E) multiple as a positive factor.
The revised price target reflects a forward-looking assessment, as BMO Capital Markets has applied a rolling methodology extending into fiscal year 2026. This long-term approach underscores the firm's belief in Constellation Brands' sustained performance and market position.
InvestingPro Insights
Following BMO Capital Markets' optimistic update on Constellation Brands (NYSE:STZ), InvestingPro data provides additional context to the company's financial health and market performance. Constellation Brands holds a market capitalization of $49.05 billion, with a current P/E ratio of 28.21, suggesting investors are willing to pay a premium for its earnings compared to the industry average. This aligns with the company's strong revenue growth, with the last twelve months as of Q3 2024 showing a 2.75% increase, reflecting the robust sales mentioned in the earnings report.
InvestingPro Tips indicate that Constellation Brands has a history of raising its dividend, with an increase for 9 consecutive years, and maintains a moderate level of debt, which may appeal to investors seeking stable dividend-paying stocks. Additionally, while the company trades at a high revenue valuation multiple, it has been profitable over the last twelve months and analysts predict profitability will continue this year.
For readers looking to dive deeper into Constellation Brands' financials and future prospects, more InvestingPro Tips are available at https://www.investing.com/pro/STZ. Don't forget to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With 10 more tips listed in InvestingPro, investors can gain a comprehensive understanding of the company's potential for sustained growth and market performance.
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