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Jefferies maintains Buy on Constellation Brands stock, highlights sales and EBITDA

EditorAhmed Abdulazez Abdulkadir
Published 08/16/2024, 05:50 AM
STZ
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On Friday, Jefferies sustained its Buy rating on shares of Constellation Brands (NYSE:STZ), with a consistent price target of $311.00. The firm highlighted the company's impressive sales and EBITDA growth since 2021, citing a 13% and 15% increase respectively. Constellation Brands, known for its beer, wine, and spirits, has seen its beer brands gain popularity while it revamps its wine and spirits division. Additionally, the firm noted an expansion in the company's margins.

According to Jefferies, a new share structure has been implemented that enhances both shareholder and management control over capital. This change is expected to contribute positively to Constellation Brands' financials. The firm also pointed out that Constellation Brands has been delivering substantial free cash flow, which is projected to accelerate further.

The financial institution remarked on the stock's performance, stating that despite the positive changes within the company, Constellation Brands' share price has not reflected these improvements. Jefferies suggests that the company could significantly increase cash returns to its shareholders. This could be achieved through a combination of a share repurchase program and a dividend increase, which may serve as catalysts to stimulate the company's stock price.

Jefferies concluded with a perspective on the potential for Constellation Brands to enhance shareholder value. The firm believes that by increasing cash return through strategic financial maneuvers, the company could jumpstart its stock shares and provide a more attractive proposition for investors.

InvestingPro Insights

Complementing Jefferies' optimistic outlook on Constellation Brands, InvestingPro data underscores the company's robust financial health and potential for investor returns. With a market capitalization of $44.68 billion and a solid Price-to-Earnings (P/E) ratio of 18.2, Constellation Brands showcases a stable investment profile. The company's revenue growth remains positive, with a 5.25% increase over the last twelve months as of Q1 2023, reflecting its strong sales performance.

Two key InvestingPro Tips further illuminate the company's strengths. First, Constellation Brands has consistently raised its dividend for nine consecutive years, indicating a reliable and growing income stream for investors. Second, the company's liquid assets surpass its short-term obligations, suggesting a robust liquidity position that can support ongoing operations and strategic investments. Notably, the company is trading at a high revenue valuation multiple, which may be a factor for investors to consider when evaluating the stock's current price.

For investors seeking more in-depth analysis, there are additional InvestingPro Tips available that delve into various aspects of Constellation Brands' financials and projections. These tips can be accessed through InvestingPro's platform, offering valuable insights for making informed investment decisions.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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