When it came to reporting first-quarter earnings on Thursday, Constellation Brands (STZ) crushed it.
The Fortune 500 company has Corona and Modelo beer brands to thank for blowing past Wall Street’s earnings-per-share consensus of $1.99 to report EPS of $2.34. Shares that closed on Wednesday at $183.68, shot up at the open to $196.96 and touched an all-time high of $197.39 before ending the session at $192.79.
On a day when the S&P 500 and the Dow Jones Industrials suffered their worst daily performance in six weeks, Constellation’s gains were as welcomed as a cold beer.
Beer Portfolio Growth Outpaces Competitors
A jubilant Rob Sands, Constellation Brands’ chief executive, told analysts on a conference call that the company was raising its EPS guidance for fiscal-year ‘18 to $7.90 to $8.10, up from $7.70 to $8. He also raised growth expectations for their beer segment to 13 to 15 percent, up from 11 to 13 percent.
“We think STZ’s revised guidance for its beer segment remains conservative,” Wells Fargo analyst Bonnie Herzog told investors. She based that assessment on the 11.6 percent beer depletion rate reported in the first quarter, “which suggests shipment volumes should accelerate in Q2… STZ’s persistently strong performance of its two core brands (Corona and Modelo), huge growth opportunity in Pacifico…” as well as retailers giving their brands more shelf space.
Herzog kept an “outperform” rating on the stock and raised her target price to $215 a share.
Cowen and Co.’s Vivien Azer also has an “outperform” rating on the stock. She did, however, note a slight hiccup in the wine segment.
“Reported sales for the wine and spirits segment were down 4 percent in the quarter, largely reflecting the divestiture of the company’s Canadian wine assets,” Azer told her investors, adding, “Underlying results were better than expected though, with organic net sales growth of 6 percent versus our plus-2.0 percent estimate.”
She noted that the company’s guidance in the wine and spirits sector was unchanged with sales expected to decline 4 percent to 6 percent and operating income is expected to be flat, year on year.
The Street’s new consensus is for annual EPS to hit $7.94. Azer is projecting it will be $7.96.
Last Updated: May 4, 2023
