12-month performance: -8% Insider activity: Bearish Insider selling pattern: Large sales from Chairman and Vice Chairman Recent news: Q1 results beat expectations
Constellation Brands is an international beverage alcohol company that produces beers, wines, and spirits. The company sells a number of brands in the import and craft beer categories including Corona, Modelo, and Pacifico and also owns a number of well-known spirit brands including SVEDKA Vodka, Casa Noble Tequila, and High West Whiskey. It is listed on the New York Stock Exchange and currently has a market capitalisation of $34.8 billion.
Constellation Brands’ recent first-quarter results beat expectations. For the quarter, the company reported adjusted earnings per share (EPS) of $2.30 which was comfortably above the consensus forecast of $2.01. However, the results were not flawless. Due to coronavirus disruption, sales for the period were down 6%. Meanwhile, its investment in Canadian marijuana producer Canopy Growth generated a loss of $32 million.
Source: 2iQ Research
Insider selling: large sales from top-level insiders
What has caught our attention here is the fact that in the last week, both the Executive Chairman and Executive Vice Chairman have offloaded a large number of STZ shares. According to Form 4 SEC Filings, Executive Chairman Rob Sands has sold around $22 million worth of Constellation Brands stock in the last week, while Executive Vice Chairman Richards Sands has sold around $97 million worth of stock. Combined, this represents the largest amount of insider selling activity in over two years. These large sales suggest that these insiders see limited upside in the stock at present. Given the size of these insider sales, we think caution is warranted towards STZ at present.
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