Constellation Brands (STZ) earnings: will beer growth continue?

12:04 am ET, 27 Jun 2018

Constellation Brands Inc (NYSE: STZ) is expected to report earnings on June 29 before market open. The report will be for the fiscal quarter ending May.  The shares are trading at 228.04, down -1.5%. What are the STZ earnings expectations?  What news will the market be watching out for? 

Constellation Brands is the third largest beer seller in the United States.  In some ways, it's faring much better than established giants such as Anheuser Busch InBev (NYSE: BUD) and Molson Coors.  

For the upcoming earnings, analysts will be focused on growth.  In the past year, Constellation Brands grew 10% in the beer segment and 3% in the wine and spirits division. That 3% number was a disappointment, but it didn't detract from the growth in beer sales that was responsible for most of the beer industry's growth last year. Budweiser owner InBev saw its revenue slip last year, and Molson Coors, although a privately held company, reported reduced volumes. 

Constellation Brands is expected to significantly increase its marketing expenditure, primarily driven by the marketing campaign around Corona Premier. Because of this, CEO Rob Sands believes that the operating income will closely track revenue growth in 2018, even though it has been outpacing sales for the last 3 years.

Constellation Brands has the history of beating analysts’ earnings estimates.  In the past four quarters, the company: 

  • Beat analyst EPS estimates by 36 cents ($2.34 actuals vs. $1.98 forecast) in FQ1’18;
  • Beat analyst EPS estimates by 31 cents ($2.47 actuals vs. $2.16 forecast) in FQ2’18;
  • Beat analyst EPS estimates by 13 cents ($2.0 actuals vs. $1.87 forecast) in FQ3’18;
  • Beat analyst EPS estimates by 16 cents ($1.90 actuals vs. $1.74 forecast) in FQ4’18.

For FQ1’19, EPS is expected to grow by 3% year-over-year to $2.42, while revenue is expected to grow 6% year-over-year to $2.05 billion.

  Over the last month, Constellation Brands Inc (STZ) returned +5.18%.

Constellation Brands Inc (STZ) average analyst price target ($251.00) is 10.07% above its current price ($228.04).

For the latest price and information on Constellation Brands, please visit Finstead and search for "STZ price" or "STZ news".

Constellation Brands Inc (STZ) Stock Guide

Updated at: 3:50 pm ET, 18 Sep 2020

Before we start: if you're looking for STZ stock price, you can quickly find it out by visiting Finny and typing "STZ quote". If you're looking for a quick scoop on STZ stock (chart, price target, market cap, news and buy or sell analysis), go to Finny and look for "STZ". You'll get all this info in one place. Or you can just type "STZ news" to get the latest stock news.

Looking to buy or sell Constellation Brands Inc (STZ)? Interested in getting the full scoop on STZ, including earnings and dividends, stock forecast, buy or sell analysis and key stats? If so, you came to the right place.

In this STZ stock guide, we'll address key questions about STZ, above and beyond what you can find on Yahoo Finance, Zacks, MarketWatch or Morningstar.

Here is what you'll be able to find in this guide:

Earnings and Dividends: earnings, earnings date, dividend rate and dividend yield;
Analyst Predictions: stock forecast and analyst ratings;
Analysis: Finny Score and buy or sell analysis;
Key Stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio, industry, sector, and number of employees.

And here is the list of questions we'll answer:
1. What are STZ earnings?
2. What is STZ dividend?
3. What is STZ dividend yield?
4. What is STZ stock forecast (i.e., prediction)?
5. STZ buy or sell? What is STZ Finny Score?
6. What are the reasons to buy STZ? Why should I buy STZ stock?
7. What are the reasons to sell STZ? Why should I sell STZ stock?
8. What are STZ key stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

So let's start. Scroll down to the question that interests you the most.

Earnings and Dividends

1. What are STZ earnings?

STZ trailing 12-month earnings per share (EPS) is $0.29.

2. What is STZ dividend?

STZ forward dividend is $3.00.

3. What is STZ dividend yield?

STZ forward dividend yield is 1.63%.

Analyst Predictions

4. What is STZ stock forecast (i.e., prediction)?

Based on STZ analyst price targets, STZ stock forecast is $205.00 (for a year from now). That means the average analyst price target for STZ stock is $205.00. The prediction is based on 19 analyst estimates.

The low price target for STZ is $151.00, while the high price target is $238.00.

STZ analyst rating is Buy.

Analysis

5. STZ buy or sell? What is STZ Finny Score?

#{finnyScore:43}Our quantitative analysis shows 3 reasons to buy and 4 reasons to sell STZ, resulting in Finny Score of 43.

6. What are the reasons to buy STZ? Why should I buy STZ stock?

Here are the reasons to buy STZ stock:

  • The firm’s venture capital arm, Constellation Ventures, could fuel further growth from equity investments and highlight potential acquisition opportunities.
  • Changing demographics in the U.S., including a growing population of Hispanic and millennial customers, should elevate demand for Constellation’s beer and wine brands.
  • Constellation Brands’ divestitures of value-priced wine brands for $765 million in cash proceeds will allow for more focused investments in its premium brands.
  • Constellation Brands has been significantly gaining from strength in beer business over the years. In third-quarter fiscal 2018, sales at the beer business improved 7.8%, driven by 5.9% rise in shipment volumes and depletions growth of 9.1%. The beer business also gained from strong portfolio performance and share gains for the Modelo brand family, with depletions growth of 17%.
  • Constellation Brands’ consistent focus on brand building and its initiatives to include new products are the key revenue drivers for the stock. Owing to its strategic endeavors, the company is witnessing increasing market share, especially in the U.S. beer category. Notably, the company was the highest growth contributor in the U.S. beer category and generated 80% of the total U.S. beer category growth.
  • Constellation Brands focuses on expanding operations directed toward achieving business growth. In the beer segment, the company’s expansion plans are anchored by the recent acquisition of the Funky Buddha Brewery, a leading craft brewery in Florida; the introduction of Fathom IPA by Ballast Point Brewery; the Obregon Brewery acquisition, which will bolster its high-end Mexican beer portfolio; the faster-than-expected 25 million hectares expansion of its Nava brewery in Mexico; and the construction of the East Coast brewery in Belleville, VA. Moreover, Constellation Brands is on track with its glass plant expansion, which is expected to cater to more than 50% of the glass demand.
  • Constellation Brands has been consistently generating strong cash flows from its beer as well as wine and spirits businesses, which is evident from cash from operations of $1,468.4 million, and free cash flows of $762.8 million generated in nine months of fiscal 2018. Capitalizing on its financial flexibility, the company has been making regular dividend payments. Incidentally, on January 4, the company announced quarterly dividend of 52 cents per share for Class A and 47 cents for Class B shares.
  • STZ profitability is improving. The YoY profit margin change was 9.63 percentage points. See STZ profitability chart.
  • STZ forward dividend yield is 1.63%, higher than the industry (0.60%) and sector (0.62%) forward dividend yields. See STZ forward dividend chart.
  • STZ average analyst rating is Buy. See STZ analyst rating chart.

7. What are the reasons to sell STZ? Why should I sell STZ stock?

Let's look at the reasons to sell STZ stock (i.e., the bear case):

  • Customer loyalty for wine brands is unlikely to reach the same levels enjoyed by beer and spirits, given the incredibly fragmented nature of the category, as the top three producers account for less than 50% of the total segment.
  • A higher excise tax rate could weigh on profitability if the firm were not able to pass these costs to consumers via price increases.
  • An increasing number of craft breweries and brewpubs (over 5,000 in the U.S., which have over 12% volume share) could weigh on sales of Ballast Point if its offering isn’t on point with consumers.
  • The company faces intense competition from other well-established players in the industry, including Beam Inc., Brown-Forman Corporation – B, Diageo plc, and Pernod Ricard SA. Moreover, Constellation Brands encounters competition from local and regional players in respective countries. This may affect the company’s future operating performance.
  • The prevalent sluggishness in the global economy, along with macroeconomic headwinds such as a rise in fuel and energy costs, unemployment levels and high household debts may negatively affect the discretionary spending of consumers, and consequently hamper the company’s growth and profitability.
  • Distilled spirits are subject to excise tax in various countries. Rising fiscal pressure in the U.S., European and many emerging markets may increase the risk of a potential excise tax on spirits by governments of these countries. Any excise tax increase in the future can have an adverse effect on Constellation Brands’ financial performance.
  • STZ stock price ($186.54) is close to the 52-week high ($196.59). Perhaps now is a good time to sell? See STZ price chart.
  • STZ quarterly revenue growth was -6.40%, lower than the industry and sector average revenue growth (1.15% and 1.12%, respectively). See STZ revenue growth chart.
  • STZ short interest (days to cover the shorts) ratio is 4.74. The stock garners more short interest than the average industry, sector or S&P 500 stock. See STZ short interest ratio chart.
  • STZ cash to debt ratio is 0.02, lower than the average industry (0.10) and sector (0.11) cash to debt ratio. See STZ cash to debt chart.

Key Stats

8. What are STZ key stats : revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

Let's look at the key statistics for STZ:

Metrics STZ
Price $181.84
Average Price Target / Upside $205.00 / 12.74%
Average Analyst Rating Buy
Forward Dividend Yield 1.63%
Industry Beverages - Wineries & Distilleries
Sector Consumer Defensive
Number of Employees 9,600
Market Cap $35.84B
Forward P/E Ratio 18.65
Price/Book Ratio 4.37
Revenue (TTM) $8.21B
YoY Quarterly Revenue Growth -6.40%
Profit Margin 0.68%

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