18 Apr, 2012, 09:30 ET
CHICAGO, April 18, 2012 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Constellation Brands Inc. (NYSE: STZ), Bank of America (NYSE: BAC), JP Morgan Chase & Company (NYSE: JPM), Beam Inc. (NYSE: BEAM) and Diageo plc (NYSE: DEO).
Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513
Here are highlights from Tuesday's Analyst Blog:
Constellation Brands Sells $600M Senior Notes
In an effort to enhance its financial flexibility and focus on future growth prospects, the leading wine and spirit distributor Constellation Brands Inc. (NYSE: STZ), has recently sold $600 million worth of senior notes, Reuters reported.
According to news, earlier the company has planned to sell $400 million of senior notes. The new senior notes have been issued at par with a coupon rate of 6% maturing on 1st May, 2022. A consortium of Bank of America Merrill Lynch (NYSE: BAC), JP Morgan Chase & Company (NYSE: JPM), Rabo Securities USA and Barclays Capital are the Underwriters of this issuance.
Borrowing costs have gone down significantly, marking a record low, and in turn, facilitating the companies to obtain easy financing at compelling prices. Corporate bonds are in high demand as U.S. treasuries are yielding low rates, driving investors toward the bonds issued by the sound companies.
Debt offers of big companies are being oversubscribed, providing the corporation's the option to price their offerings at lower rates. Hence, several companies are coming up with debt offerings to generate interest expense savings by refinancing their outstanding borrowings.
We believe the transaction will strengthen the company's financial position. Though Constellation Brands has an obligation to repay $330.2 million of debt in fiscal 2013, the company now has the flexibility to pay at ease.
Recently, Constellation Brands ended its fiscal 2012 with a healthy balance sheet and cash flows. During the fiscal, Constellation generated $784.1 million of cash from operations compared with $619.7 million in the previous year.
Apart from this, the company achieved a record free cash flow of $715.7 million. This enabled the company to reduce debt, as well as fund stock repurchases and acquisitions. Moreover, the company anticipates generating a free cash flow in the range of $425 million to $475 million during fiscal 2013.
Constellation Brands is the largest wine company in the world and commands a dominant position in the premium wine segment in the U.S. The company is also a leading producer of wines in Canada and New Zealand. This provides a competitive edge to the company and bolsters its well-established position in the market.
Moreover, we believe that the company's strategic initiative of expanding footholds in the U.S wine industry along with focus on brand building and promotion will accelerate its growth opportunities while strengthening its market position. Moreover, in an effort to generate strong margins, Constellation Brands is also focusing on higher priced segment across all key categories.
However, the company faces intense competition from other well-established players in the industry, including Beam Inc. (NYSE: BEAM) and Diageo plc (NYSE: DEO). Moreover, Constellation Brands also encounters competition from local and regional players in the respective countries. Consequently, this may dent the company's future operating performance.
We currently have a Zacks #3 Rank (short-term Hold rating) on the stock. Our long-term recommendation on the stock remains Neutral.
Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=5515.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leon Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.
Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
Zacks Investment Research
800-767-3771 ext. 9339
SOURCE Zacks Investment Research, Inc.
Share this article