by Jon C. Ogg
Too bad for Constellation Brands (STZ) this week. The company lost more than 10% on Thursday after poor earnings from operational issues in the U.K. It also seems that the influx of Australian wines could be playing part, at least that seems to be affecting many overall wine trends from what restauranteurs and liquor stores have been saying. Due to a weak stock and due to traders selling losers, the company Stock slid almost 3% again Friday. So here we sit down 14% from Wednesday at $24.41, very close to the bottom of the $23.32 to $29.17 52-week trading range. To me the the EPS guidance cut for 2007 to $1.65 to $1.70 (before integration charges, otherwise $1.32-1.38) from $1.72 to $1.76 just doesn’t seen all that bad in the grand scheme of things. If they only hit the bottom, this generates a forward P/E of roughly 15, which won’t kill any value investors.
This sell-off seems overdone and longer-term investors can probably start looking back into the stock after Monday or Tuesday of next week, assuming you don’t think that alcoholic beverages are going completely out of vogue. They won’t have any of my personal consumption business this month, but they’ll have me backk as a customer in February.
It looks like S&P agrees with me here, on the stock that is. Today they have raised their stock rating to a Buy, although their $31.00 target has been trimmed down to $28.00.
You can see the chart at the end.
January 6, 2007
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