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Cramer: Constellation Brands Can 'Take Over The World'


Shares of Constellation Brands, Inc. (NYSE: STZ) were trading up more than 5 percent on Wednesday afternoon, following the announcement of the company’s fiscal fourth quarter financial results. Earnings of $1.19 per share came in $0.05 ahead of the Street’s consensus; revenue of $1.543 billion also beat estimates of $1.526 billion. Also helping the stock surge was the company’s guidance for 2017, which implied double-digit year-over-year EPS growth.

Related Link: Constellation Brands Rallies Following Q4 Results, FY17 Outlook

Following the earnings call, Jim Cramer appeared on CNBC talking about the results and about why he likes the company.

“This is what you need to know,” Cramer started. “This was the best beverage quarter of any company in America.” The analyst highlighted the 13 percent organic growth rate, a figure rarely seen in the industry.

Cramer then pointed out a few strong brands in the company’s portfolio, including Corona and Modelo beers, Mondavi wine and Casa Noble tequila. “They’ve used all the cash flow… $522 million,” he pointed out.

In addition, the expert highlighted, investors might have heard about an IPO for a part of the company’s Canadian wine business being on the works. And, even further, Constellation declared a huge boost in its dividend, to $0.40 per share for Class A shares, and $0.36 per share for Class B shares.

A Good Business ‘Modelo’

Later, Cramer went back to the company’s business. It’s all about Mexican beer now, he assured. “They don’t even have the capacity to make all that is necessary… because this is so popular; it is what people want. And Constellation can go higher, in part because, this is like the cash flow that you used to see from the old Anheuser-Busch, when it was starting to really take over the world.”

“These guys can take over the world, if they want to,” he added, acknowledging that there is still Diageo plc (ADR) (NYSE: DEO), Anheuser Busch Inbev SA (ADR) (NYSE: BUD) and other large companies ahead of them. However, “this company is based on fast-growing Mexican beer that’s faster than any other drink; faster than water!”

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.


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