Things to Know Before Constellation Brands' (STZ) Q3 Earnings
Constellation Brands, Inc. STZ is scheduled to release third-quarter fiscal 2023 results on Jan 5, 2023. The alcoholic beverage bigwig is expected to deliver top-line growth in the to-be-reported quarter.
The Zacks Consensus Estimate for the company’s fiscal third-quarter earnings is pegged at $2.89 per share, indicating a 7.4% decline from the year-ago quarter’s reported figure. The consensus mark has moved down 2% in the past 30 days. The consensus mark for revenues is pegged at $2.39 billion, suggesting a 3.1% increase from the prior-year quarter’s reported figure.
We expect the company’s fiscal third-quarter total revenues to increase 2.5% year over year to $2,379.1 million and comparable earnings to decline 12.8% to $2.72 per share.
In the last reported quarter, the alcohol behemoth delivered an earnings surprise of 10.1%. Also, its bottom line beat estimates by 10.5%, on average, over the trailing four quarters.
Constellation Brands Inc Price and EPS Surprise
Constellation Brands Inc price-eps-surprise | Constellation Brands Inc Quote
Key Factors to Note
Constellation Brands is expected to have gained from continued growth in the beer business and robust consumer demand for its portfolio of premium, high-end products in the fiscal third quarter. STZ’s wine & spirits business has been benefiting from its premiumization strategy focused on making investments to fuel growth of its power brands through innovation, capitalizing on priority, consumer trends and product introductions. Strength in high-end Power Brands, including The Prisoner Brand Family, Kim Crawford and Meiomi, have been key growth drivers.
Constellation Brands has been significantly gaining from strength in the beer business. Depletion volume growth, stemming from strength in Modelo Especial and Corona Extra, has been aiding the top line. The beer segment has also been witnessing gains from premiumization, driven by growth in traditional beer as well as flavors category, including seltzers, flavored beer, RTD spirits and flavored malt beverages. These are likely to have aided the top line in the to-be-reported quarter. We expect revenues for the beer business to increase 3.5% year over year to $1,813.4 million in the fiscal third quarter.
However, higher COGS, and marketing and SG&A expenses have been affecting the company’s earnings.
On the last reported quarter’s earnings call, management expected the operating margin in the second half of fiscal 2023 to be affected by ongoing inflationary pressures across raw materials and packaging, additional headcount in training, increased depreciation related to its brewery capacity expansion, and higher marketing expenses.
Supply-chain challenges and elevated material costs due to inflationary headwinds have been weighing on the company’s bottom-line performance. Constellation Brands has been witnessing supply-chain challenges, driven by container surcharges and warehousing costs, which are likely to have impacted its business in third-quarter fiscal 2023.
For third-quarter fiscal 2023, we expect the adjusted operating margin to decline 400 bps year over year to 31.5%, driven by a 120-bps increase in SG&A expense rate and a 280-bps rise in COGS as a percentage of sales.
Zacks Model
Our proven model does not conclusively predict an earnings beat for Constellation Brands this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Constellation Brands has a Zacks Rank #4 (Sell) and an Earnings ESP of -4.11%.
Stocks With Favorable Combination
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
Conagra Brands CAG currently has an Earnings ESP of +5.46% and a Zacks Rank of 2. The company is likely to register increases in the top and bottom lines when it reports second-quarter fiscal 2023 results. The Zacks Consensus Estimate for CAG’s quarterly earnings has been unchanged in the past 30 days at 65 cents per share. The consensus mark indicates 1.6% growth from the year-ago quarter’s reported number.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Conagra’s top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $3.27 billion, which suggests a rise of 6.9% from the figure reported in the prior-year quarter. CAG has delivered an earnings beat of 1.8%, on average, in the trailing four quarters.
Archer Daniels ADM currently has an Earnings ESP of +1.17% and a Zacks Rank of 2. The company is likely to register increases in the top and bottom lines when it reports fourth-quarter 2022 results. The Zacks Consensus Estimate for quarterly earnings moved south by a penny in the last 30 days to $1.57 per share. However, the consensus estimate indicates growth of 4.7% from the year-ago quarter's reported number.
Archer Daniels’ top line is expected to have risen year over year. The Zacks Consensus Estimate for ADM’s quarterly revenues is pegged at $26.6 billion, suggesting growth of 15.1% from the figure reported in the prior-year quarter. ADM has delivered an earnings beat of 26.2%, on average, in the trailing four quarters.
Mondelez International MDLZ currently has an Earnings ESP of +6.67% and a Zacks Rank of 2. The company is likely to register an increase in the top line when it reports fourth-quarter 2022 results. The Zacks Consensus Estimate for quarterly revenues is pegged at $8.33 billion, which suggests a rise of 8.7% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for quarterly earnings has been unchanged at 71 cents per share in the past 30 days. The consensus mark for MDLZ indicates earnings to be flat with the year-ago quarter’s reported number. MDLZ has delivered an earnings beat of 6.4%, on average, in the trailing four quarters.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Archer Daniels Midland Company (ADM) : Free Stock Analysis Report
Conagra Brands (CAG) : Free Stock Analysis Report
Constellation Brands Inc (STZ) : Free Stock Analysis Report
Mondelez International, Inc. (MDLZ) : Free Stock Analysis Report
