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Constellation Brands, Inc. (STZ) Beats Earnings and Revenue Expectations

The stock of Constellation Brands, Inc. (NYSE:STZ) jumped on Wednesday after the company reported its financial results for the first quarter of fiscal 2016. The beverage alcohol company topped analysts’ estimates for both earnings and quarterly revenue with earnings per share of $1.26 over net revenues of $1.63 billion. The analysts at Thompson Reuters expected earnings per share of $1.23 over revenues of $1.62 billion. For the same period of the previous fiscal year, Constellation Brands, Inc. (NYSE:STZ) reported revenue of $1.53 billion, with EPS of $1.09. Rob Sands, president and chief executive officer of Constellation Brands, said in a statement, “We delivered exceptional performance for our beer business, which is the primary driver of the upward revision to our EPS outlook for the year, and our brewery expansion continues to proceed as planned.” The beverage company announced earlier in June that is investing up to $2 billion in its Mexican breweries, as it will help the company boost its U.S. market share.

In addition to the quarterly results announcement, the beer company announced that is will acquire Meiomi wine brand for $315 million and the transaction is likely to close by the end of August. In a separate statement, Jay Wright, President Wine and Spirits, Constellation Brands, added, “Meiomi complements the array of selections we offer consumers by filling a niche in our luxury portfolio. The rapid growth rate Meiomi has achieved in such a short time is evidence that the brand resonates with consumers, and we’re excited about adding it to our wine portfolio.”


The shares of Constellation Brands are up by 18.10% year-to-date and the company was among the most popular consumer non-durable stock picks of hedge funds with 62 investors holding $4.34 billion worth of stock at the end of the first quarter. Insider activity is another important parameter in estimating the movement of the a stock and in case of Constellation, there were a couple of insider transactions earlier this year including Mr. Sands’ sales of 156,200 shares and 56,243 shares of the company in January.

Why are we interested in the 13F filings of a select group of hedge funds? We use these filings to determine the top 15 small-cap stocks held by these elite funds based on 16 years of research that showed their top small-cap picks are much more profitable than both their large-cap stocks and the broader market as a whole. These small-cap stocks beat the S&P 500 Total Return Index by an average of nearly one percentage point per month in our backtests, which were conducted over the period of 1999 to 2012. Moreover, since the beginning of forward testing from August 2012, the strategy worked just as our research predicted, outperforming the market every year and returning 135% over the last 32 months, which is more than 80 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).

Despite an overall bullish hedge fund sentiment, seven out of its 10 largest stockholders trimmed their positions in the company during the January – March period. For a detailed understanding of hedge fund activity, let’s analyze some recent moves encompassing Constellation Brands, Inc. (NYSE:STZ).

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