Categories Analysis, Consumer

Constellation Brands (STZ) is preparing to report Q1 earnings. Here’s what to expect

The company is expected to release first-quarter 2025 financial results on July 3, before the opening bell

As Constellation Brands, Inc. (NYSE: STZ) prepares to report first-quarter results, the focus is on the brewer’s impressive performance in the beer market. Recent data show that the business has remained resilient to market headwinds. A steady uptick in volumes and higher prices appears to have more than offset the impact of rising costs and weakness in the Wine & Spirits segment.

It has been a rollercoaster ride for STZ so far this year, with the stock hitting an all-time high in March and gaining about 6% year-to-date. However, the price dropped slightly in recent weeks, making the stock more affordable. The upbeat sentiment over the company’s booming beer business indicates that the stock is poised to bounce back soon. With steady market share gains and strong potential for creating shareholder value, Constellation Brands might not disappoint long-term investors.

Q1 Report Due

The New York-headquartered beverage company will be publishing its first-quarter report on Wednesday, July 3, at 7:30 am ET, amid expectations for revenue and earnings growth. Market watchers forecast a net income of $3.46 for the May quarter, on a per-share basis. In the first quarter of 2024, earnings per share were $2.91. It is estimated that revenues increased to $2.67 billion in Q1 from $2.51 billion a year earlier.

Last year, the alcoholic beverage market faced significant pressure from economic uncertainties, inventory issues, and the ongoing shift to non-alcoholic beverages. However, Constellation Brands continues to be a market leader — the beer business delivered 9% sales growth and 7% shipment growth in FY24. The Modelo, Pacifico, and Corona brands played a key role in gaining market share last year.

Earnings Beat

In the fourth quarter of 2024, comparable earnings increased to $2.26 per share from $1.98 per share in the prior year period and exceeded Wall Street’s projection, marking the fifth beat in a row. On an unadjusted basis, the company reported a profit of $392.4 million or $2.14 per share for Q4, vs. $223.0 million or $1.21 per share in Q4 2023. At $2.14 billion, fourth-quarter net sales were up 7% year-over-year and slightly above expectations. A double-digit increase in Beer sales more than offset weakness in the Wine & Spirits division.

From Constellation Brands’ Q4 2024 earnings call:

“While we continue to build on the success of our iconic brands, we are also building good traction with our focused innovations aligned with consumer-led trends of premiumization, flavor, and betterment. Our Modelo Chelada brands delivered an increase of 30% in depletions also surpassing 20 million cases sold and remained the No. 1 Chelada in the category supported by the launch of our new flavor, Sandía Picante, and new pack size offerings. We are excited to continue to build on that momentum in fiscal ’25 with two new flavors, Fresa Picante and Negra con Chile.”

Constellation Brands’ stock experienced weakness ahead of the earnings, and the downturn continued in early trading on Monday. In the past two weeks, it stayed above the 12-month average.

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