It is estimated that in the longer term, the company’s overall performance will be boosted by its strong fundamentals and recent investments in the cannabis sector, primarily the acquisition of a majority stake in Canopy Growth. The other contributing factors include the development of the company’s digital platform and the management’s aggressive efforts at brand-building.
Long-term growth is expected to be boosted by recent investments in the cannabis sector, primarily the acquisition of a majority stake in Canopy Growth
Earlier, Constellation Brands had trimmed its full-year2019 earnings outlook to reflect interest expenses related to the funding availed for the acquisition of Canopy Growth last year, as well as the weakness in the wine and spirit business. The lackluster performance of the segment is expected to continue in the coming quarters.
In the third quarter, a double-digit increase in beer sales pushed up revenues and adjusted earnings by 9% and 18% respectively, which also surpassed the estimates. Unadjusted profit, including loss from unconsolidated investments, fell 38% during the quarter.
Last month, rival winemaker Molson Coors Brewing Company’s (TAP) reported a 6% decline in sales to $2.4 billion, which also missed the estimates. Meanwhile, adjusted earnings rose sharply to $0.84 per share aided by favorable pricing and solid volume growth.
Shares of Constellation Brands have been in a downward spiral after hitting an all-time high about twelve months ago. After suffering a significant loss in 2018, the stock made a modest recovery this year, gaining about 3.7% so far.