Home / Daily News / Constellation Brands, Inc. (NYSE:STZ) Stock Valuation in Perspective

 

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Taking a look at Constellation Brands, Inc. (NYSE:STZ)’s valuation level, we can focus on several ratios. One of the quickest ways to determine the projected value of a stock is the price to earnings growth, or PEG ratio.

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This formula was popularized by Peter Lynch and according to his calculations, a stock which is fairly valued will have a price to earnings ratio equal to its rate of growth. Simply put, a stock with a PEG ratio of 1 would be considered fairly valued. A stock with a ratio of under 1.0 would be undervalued and a stock with a PEG over 1.0 would be considered over valued. Constellation Brands, Inc. currently has a PEG ratio of 10.98.Investors may already be plotting the course for the next few quarters. Many investing decisions may need to be made after the next round of company earnings reports are released. Studying the numbers can help the investor see whether or not the stock’s prospects look good in the near term as well as the longer term. It remains to be seen whether optimism in the stock market will continue into the next year. Investors will closely be monitoring the major economic data reports over the next couple of months. While nobody can be sure which way the momentum will shift, preparing for multiple market scenarios may greatly help the investor if changes start to occur.  

Most importantly investors want to know where the stock is headed from here. In order to get a sense of Wall Street sentiment, we can look to equity research analyst estimates. On a one to five ratings scale where 1.0 indicates a Strong Buy, 2.0 indicates a Buy, 3.0 a Hold, 4.0 a Sell and 5.0 a Stong Sell. Constellation Brands, Inc. (NYSE:STZ) currently has an average analyst recommendation of 2.10 according to analysts. This is the average number based on the total brokerage firms taken into consideration by Beta Systems Research. The same analysts have a future one-year price target of $226.90 on the shares.

Technical Indicators
In addition to sell-side rational, we can also take a look at some technical indicators. The stock is currently -3.51% away from its 50-day simple moving average and -3.18% away from the 200 day average. Based on a recent trade, the shares are -13.24% away from the 52-week high and 23.75% from the 52-week low. The RSI (Relative Strength Index), which shows price strength by comparing upward and downward close to close movements. An RSI approaching 70 is typically deemed to be nearing overbought status and could be ripe for a pullback. Alternatively an RSI nearing 30 indicates that the stock could be getting oversold and might be considered undervalued. The RSI for Constellation Brands, Inc.(NYSE:STZ) currently stands at 48.71.

Performance
Constellation Brands, Inc. has posted trailing 12 months earnings of $2.89 per share. The company has seen a change of 79.30% earnings per share this year. Analysts are predicting 9.21% for the company next year. The firm is yielding 2.70% return on assets and 6.50% return on equity.

Investors are often trying to figure out the best way to analyze the stock market. When it comes to stock research, investors may use fundamental analysis, technical analysis, or a combination of both. Boiling down the two techniques, studying the fundamentals puts the focus on factors that may influence specific stocks, and studying the technicals puts the focus on market behavior analysis. Investors who study the fundamentals are typically trying to understand why stocks and markets move the way they do. Technical analysts are more concerned with spotting trends and trying to measure the characteristics of those trends. Some investors may prefer one method of stock research over another, but many investors may use a combination of both methods to help make sure that all the bases are covered.

 
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