Corona beer owner gets recognition on Wall Street for what we knew all along

Published Mon, Aug 22 20224:37 PM EDTUpdated Mon, Aug 22 20224:41 PM EDT

Constellation Brands (STZ) has finally received the kind of recognition on Wall Street that's been key to the Club's investment thesis since we initiated the the beer, wine and spirits stock back in May. Shares of Constellation Brands rose about 1% in Monday's terrible overall market after Morgan Stanley raised its earnings-per-share estimates on accelerating momentum in beer sales. The Club's stake The recession-resistant nature of Constellation's Mexican beers — Corona, Modelo and Pacifico — has been at the core of why we like this stock so much , especially during these uncertain times of spiking inflation and slowing economic growth. "They have 100% of the growth of beer," Jim Cramer said in the Investing Club's "Morning Meeting" on Monday , highlighting the company as a top competitor in its category. What's more is Constellation shares have has been outperforming the broader market with a 1.5% year-to-date gain compared to the S & P 500 's 13% drop in 2022 — an indication that confidence in consumer demand for the company's products overrides fears of higher prices in nearly everything nowadays. Analysts' take In their research note, Morgan Stanley analysts forecasted fiscal second quarter beer depletions of 10.5%, saying they see their estimate as "conservative" compared to 9% previously. The current market consensus is closed to 9% in beer depletions. In the beverage industry, depletions measure cases that distributors sell to retailers. To that end, here's Morgan Stanley's thoughts on earnings per share estimates. We are raising F2Q EPS from $3.09 to $3.15 vs the $2.95 consensus, and our FY23 estimate from $11.70 to $11.80 vs the $11.54 consensus. The note also signaled that Constellation's high-end products can hold up even as consumers trade down to cheaper alternatives due to its "strong momentum at key brands" of Mexican beers. This indicates consumers still want premium beer as an affordable indulgence even as inflation worries impact spending in other areas. Against this positive backdrop, Morgan Stanley reiterated its over