Constellation Brands, Inc., is headquartered in Victor, New York. STZ is a prominent American winery and one of the biggest beer firms. With a $45.6 billion market capitalization, Constellation Brands sells its beverages in more than 100 nations globally.
STZ Lagged S&P 500
Constellation Brands is a " large-cap stock, " defined as a company valued at $10 billion or more. The company's market capitalization surpasses this level, indicating its significant size, power, and dominance within the brewing sector. Its impressive premium brands include SVEDKA Vodka, Corona, Kim Crawford, Robert Mondavi, Modelo Especial, and Meiomi.
Despite its resilience, Constellation Brands has lost 9.6% of its value from its all-time high of $274.87, which it reached on April 11. Over the last three months, STZ has slightly declined, outperforming the 2.3% rise in the S&P 500 Index (SPX) during that same period.
In the long run, STZ and SPX have not performed as well. In 2024, STZ gained 3.8% after declining 3.2% over the previous 52 weeks. This is less than the returns of 14.7% on a year-over-year basis and 22.7% profits over the prior year for SPX.
STZ Stock Bearish Factors
Constellation Brands has encountered difficulties in the wine and spirits sector, mostly due to challenging conditions across the majority of price points. The company has also had to contend with increased corporate expenses, primarily due to increased costs for professional charges, perks, and compensation. During the most recent earnings call, management indicated that these costs will slightly increase in the upcoming quarters, mostly due to increased pay and expenditures in digital capabilities.
Additionally, Constellation Brands anticipates a slight rise in interest costs in the second quarter of its fiscal year due to lower capitalized interests from expanding its beer business. It expects the actual rate of taxation to slightly increase, in part because the wine and spirit division will contribute more to overall operating revenue.
STZ Management's Projection
The company recently provided an update, stating that sluggish demand trends continued into the wine and spirits sector's second half of the fiscal year, especially in the U.S. wholesaler market. This resulted in reductions for both conventional and luxury wine brands. Rising unemployment and other macroeconomic issues have reduced consumer demand.
Because of this, STZ anticipates that in the subsequent quarter of its fiscal 2025, the wine and spirits sector will have non-monetary impairment of goodwill costs of between $1.5 and $2.5 billion. These impairment fees are further compounded by the company's operational issues, which persist despite price and marketing initiatives to maintain core brands.
Constellation Brands Stock Technical Analysis
In the daily chart of STZ stock price, the recent price showed a decent buying pressure, sweeping the sell-side liquidity from the February 2024 low. As a result, multiple bullish daily candles have formed above the 50 day Exponential Moving Average line, supporting the buying pressure.
In the volume structure, a bullish rally base rally is seen where the 248.30 level is acting as a high volume support. Primarily, more upside pressure is possible as long as bulls remain steady above the high volume line.
However, the dynamic lines remains below the current price, suggesting a downside correction as a mean reversion.
In that case, the Constellation Brands stock price is likely to aim down and find a support from the 200 day SMA line before reaching the 273.08 level. A break below the 247.12 level could lower the price towards the 227.00 area.
