Constellation CEO hints at stock buyback after shares take a beating. The Club would fully support the move

Published Thu, Jan 5 20236:54 PM EST

Constellation Brands (STZ) could potentially implement a stock buyback program, CEO Bill Newlands said Thursday — a move we would welcome as shareholders in the alcoholic beverage maker. Newlands' comments came on the heels of Constellation reporting mixed 2023 fiscal third-quarter results earlier in the day, sending the company's stock price tumbling. Shares of Constellation closed down nearly 10%, settling at $208.68 apiece. During an interview with Jim Cramer on "Mad Money" Thursday evening, Jim pushed Newlands on whether Constellation would consider a buyback given the decline in the stock. "Big cash flow, lots of opportunity to do many things with that cash at $208, perhaps the best thing to do with that cash is to buy stock," Jim prodded. For his part, Newlands responded, "We already have additional approval from our board to buy back stock. And I think at this price point, it would be silly not to do just that." Still, Newlands called Thursday's market moves a "total overreaction." While the Club was disappointed by Constellation's lackluster earnings and full-year-guidance downgrade, we see the stock's slide as a buying opportunity . And we remain pleased that Constellation continues to see robust demand for its high-end specialty beer offerings. We also continue to like the company for its robust cash generation and ability to raise prices, while simultaneously taking market share. U.S.-based Constellation's growth in the beer market has been propelled by its 3 Mexican beer brands — Modelo Especial, Corona and Pacifico. The company also owns a range of other high-quality alcohol brands, including Svedka vodka and Kim Crawford sauvignon blanc. (Jim Cramer's Charitable Trust is long STZ. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

A case of Constellation Brands Inc. Corona beer sits on a shelf in a cooler during a delivery in Ottawa, Illinois, U.S., on Tuesday, April 2, 2019.

Daniel Acker| Bloomberg | Getty Images