Constellation brands(Nyse: stz) Shareholders face the sober reality of bitter performance of shares price price last year. Shares prices beerWine and giant giant are reduced by about 37% compared to its 52-week maximum due to less than the star trend of sales in the last quarters. The shares are also under pressure because of the concern that the company can get into the trade war of Trump’s administration, as it imports a significant part of its beer products from Mexico.
Titles do not inspire much confidence, but there are still many reasons why investors still should not give up this beaten industry leader. Let’s talk about what to do with Constellation brands Stock now.
Constellation brands has grown into a dominant force on the beer market, holding exclusive rights to the market and selling the leading Coron brands and models in the United States. The company is additionally diverse as one of the world’s largest wine producers, with a portfolio of top brands, along with a smaller ghost segment.
As the biggest American beer importer, Constellation brands faces some unique challenges, because Trump’s administration seems to pass 25% of tariffs to some Mexican imports (others stop until April 2), where almost the entire beer in bottles and grown. Although complete details have not yet been published, Constellation faces higher costs per unit that could reach earnings.
Previously, the company tried to diminish concern, noting that the sources of several inputs such as barley and hops in the country, which means that it could have room to relieve outburst. The last statement of the company suggests that it is still evaluating the situation. It is all in an environment where recent financial trends have indicated growing uncertainty.
In the last reported fiscal third quarter (for a period that ended on November 30), net sales growth and adapted earnings per share (EPS) were straight in the year, and management cited weaker consumer consumer consumer in a challenging macroeconomic background.
Investors who believe that constellation brands will fight in the midst of this new circle of uncertainty could consider the sale of shares or at least avoid for now.
Picture source: Getty Images.
Apart from any short -term winds associated with tariffs and even economic environment, it is important for investors to lose the monitoring of a big picture. Constellation brands remains very profitable, supported by leading market positions and loyal consumers. Indeed, Modelo is the best-selling beer in the US, Detroning Bud Light of rivals Anheuser-Busch Inbev 2023.
This measure may not be a lot of surprise that a billionaire is an investor Warren Buffett And his team on Berksshire Hathaway They found something convincing about the constellations to do so one of their latest investments. According to the recent corporation, the financial conglomerate has purchased 5.6 million Constellation brands for $ 1.2 billion during the last quarter (ending on December 3) and now has a 3.1% share.
Although Berksshire is a specific explanation for the purchase of undiscovered, Constellation corresponds to the Buffett’s investment philosophy, which focuses on companies with strong brands, constant financial flows and growth potential. It is not a guaranteed winner, but the knowledge that the basis of the legendary investor is convincing.
What I like with stock is his current estimate. Constellation brands shares are now traded only 12 times more than its consensus 2025 EPS as a ratio of price and earnings (p/e). The apparent value of the shares is also visible in the dividend yield, which climbed to 2.4%, which is significantly above the five -year average yield closer to 1.5%.
Investors who are convinced brands of constellations will become stronger, have a good reason to buy and retention of shares in the long run.
I am cautiously a bull, looking at a bottle of constelled brands as half full. Recognizing uncertainty, one has to do the case that a deep sale is already more than the price in some of the worst scenarios for the company.
It is always that the constellation brands can surpass the low strip of expectations. For investors with a long -term time horizon and which can gastric volatility, it may be time to take a sip and buy a small position in stock for a variety of portfolio.
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Dan Victor There is no position in any of the shares mentioned. Motley Fool has positions and recommends Berksshire Hathaway. Motley Fool recommends constellation brands. Motley Fool has disclosure rules.
