Categories AlphaGraphs, Consumer, Earnings

Earnings preview: High costs to take fizz out of Constellation Brands’ Q4 results

Constellation Brands (STZ), the brewer of popular beer brand Corona, is slated to publish its fourth-quarter results on April 4 before the opening bell. The consensus Wall Street estimate is for a 9% drop in earnings to $1.73 per share. Revenues are predicted to slip about 2% to $1.73 billion. Market watchers are of the view that the chances of earnings beating the forecast are low this time, unlike in the trailing two quarters when the company gave positive surprises.

The impact of the negative factors, mainly the unfavorable market conditions and rising marketing expenses, could be offset by the strength of the company’s iconic beer brands to a large extent. The beer business, led by the Corona and Modelo Especial brands, has remained the main growth driver for several years, all along outperforming the American beer market.

Constellation Brands q3 2019 earnings snapshot
Constellation Brands Q3 2019 Earnings Infographic

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.

 

We’re on Apple News! Follow us to receive the latest stock market, earnings and financial news at your fingertips

Most Popular

Tyson Foods (TSN) Q1 2023 Earnings: Key financials and quarterly highlights

Tyson Foods Inc. (NYSE: TSN) reported first quarter 2023 earnings results today. Sales rose 2.5% year-over-year to $13.2 billion. Net income attributable to Tyson was $316 million, or $0.88 per

After weak start to 2023, Apple (AAPL) sees some bright spots

Apple Inc. (NASDAQ: AAPL) this week reported its first revenue decline in more than three years, even as the high inflation continues to squeeze customers’ spending power. Sales of the

Earnings: Qualcomm (QCOM) Q1 profit falls on lower revenues

Chipmaker Qualcomm, Inc. (NASDAQ: QCOM) has reported lower earnings and revenues for the first quarter of 2023. The company also provided guidance for the second quarter of 2023. At $9.5

Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top