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Earnings preview: Constellation Brands to benefit from strength in beer in Q2

Constellation Brands (NYSE: STZ) is slated to report second quarter 2020 earnings results on Thursday, October 3, before the market opens. The company is expected to report earnings of $2.60 per share on revenue of $2.34 billion. This compares to EPS of $2.87 on revenue of $2.30 billion reported a year earlier.

Constellation will continue to see momentum in its beer business, led by its Modelo and Corona brands, in the second quarter and this strength will benefit the topline results. The company’s efforts in shuffling its product portfolio as well as its other business investments are likely to pay off. Constellation is also likely to gain rewards from its investment in cannabis company Canopy Growth. Updates on these areas are worth watching.

Constellation has been experiencing weakness in its wines and spirits business for a while and the impact of the recent divestitures in this division and its future growth plans are areas to keep an eye on.

In the first quarter of 2020, the company beat analysts’ expectations. Net sales grew 2% to $2.1 billion while adjusted EPS rose 0.5% to $2.21. Sales grew 7% in Beer and fell 8% in Wines and Spirits.

Also read: Cal-Maine Foods Q1 2020 Earnings Report

For fiscal year 2020, Constellation expects reported EPS of $4.95-5.25 and adjusted EPS of $8.65-8.95. In the beer business, the company expects net sales and operating income growth of 7-9%. In the wine and spirits business, net sales is expected to drop 20-25% while operating income is expected to decline 25-30%.

Shares of Constellation Brands have gained 26% year-to-date and 4% in the past three months. The majority of analysts have rated the stock as Buy and it has an average price target of $227.62.

Browse through our earnings calendar and get all scheduled earnings announcements, analyst/investor conference and much more!

Categories: Earnings Retail
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