Constellation Brands (STZ) could potentially conduct a share buyback program, CEO Bill Newlands said Thursday — a move we, as shareholders of the alcoholic beverage maker, would welcome. Newlands’ comments followed Constellation, which earlier in the day reported mixed results for the third quarter of fiscal 2023 that sent the company’s share price plummeting. Constellation shares closed down almost 10% to trade at $208.68 apiece. During an interview with Jim Cramer on “Mad Money” Thursday night, Jim Newlands urged whether Constellation would consider a buyback given the stock’s decline. “Big cash flow, lots of ways to do lots of things with that money at $208, maybe the best thing to do with that money is buy stocks,” Jim teased. For his part, Newlands replied: “We already have additional approval from our board to buy back shares. And I think at this price it would be foolish 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 downgrade of its full-year guidance, we view the stock’s slide as a buying opportunity. And we continue to be pleased that Constellation continues to see robust demand for its premium specialty beers. We continue to like the company for its robust cash generation and ability to increase prices while gaining market share. US-based company Constellation’s growth in the beer market has been fueled by its three Mexican beer brands – Modelo Especial, Corona and Pacifico. The company also owns a number of other high-quality alcohol brands, including Svedka Vodka and Kim Crawford Sauvignon Blanc. (Jim Cramer’s Charitable Trust is long STZ. A full list of shares can be found here.) As a subscriber to CNBC Investing Club with Jim Cramer, you’ll receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling any stock in his charitable foundation’s portfolio. When Jim spoke about a stock on CNBC television, he waits 72 hours after the trade alert is issued before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS GOVERNED BY OUR TERMS AND CONDITIONS AND PRIVACY POLICY ALONG WITH OUR DISCLAIMER. NO OBLIGATION OR OBLIGATION SHALL BE OR CREATED BY YOUR RECEIVING OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC RESULT OR PROFIT IS GUARANTEED.
A case of Corona beer from Constellation Brands Inc. stands on a shelf in a cooler during a delivery in Ottawa, Illinois, U.S., Tuesday, April 2, 2019.
Daniel Acker| Bloomberg | Getty Images
Constellation Brands (STZ) could potentially conduct a share buyback program, CEO Bill Newlands said Thursday — a move we, as shareholders of the alcoholic beverage maker, would welcome.