U.S. Markets closed

What's in Store for Constellation Brands' (STZ) Q1 Earnings?

Zacks Equity Research

Constellation Brands, Inc. STZ is scheduled to release first-quarter fiscal 2020 results on Jun 28.

Notably, this leading wine company delivered a positive earnings surprise in the preceding three quarters. Further, it posted an average trailing four-quarter beat of 6.5%.

How Are Estimates Faring

The Zacks Consensus Estimate for first-quarter earnings stands at $2.09, indicating a 5% decline from the year-ago reported figure. However, the consensus mark remained stable over the past 30 days. For quarterly revenues, the consensus estimate is pegged at $2.06 billion, indicating a 0.8% rise from the prior-year reported figure.

Constellation Brands Inc Price and EPS Surprise

Constellation Brands Inc Price and EPS Surprise

Constellation Brands Inc price-eps-surprise | Constellation Brands Inc Quote

Factors at Play

Constellation Brands has been displaying strength, which is quite evident from its consistent earnings record and strong beer business. The company is also poised to gain from exposure in the cannabis space with its investment in Canopy Growth. Furthermore, its constant brand-building efforts, acquisitions and pipeline of innovations are commendable.

Strength in Constellation Brands’ beer business has been a key growth driver. In fourth-quarter fiscal 2019, sales for the beer business improved 9.3%, marking the 36th straight quarter of growth. In fact, this beer business was the most significant contributor to the U.S. beer market during the fiscal fourth quarter, courtesy of gains at the Modelo Especial, Corona Premier and Corona Familiar brands. These brands were aided by superb distribution gains and strong innovations.

Additionally, Constellation Brands’ consistent focus on brand building and initiatives to include new products has been aiding top-line growth. Owing to its strategic endeavors, the company is experiencing increasing market share, especially in the U.S. beer category. Moreover, it expects to expand consumer marketing efforts in fiscal 2020, with new sponsorship opportunities.

Backed by all these initiatives, Constellation Brands is likely to witness solid top- and bottom-line improvements in the to-be-reported quarter.

However, softness in the company’s wine & spirits business remains a major concern. Lower shipment volumes and depletions have been weighing on the segment’s sales. Although Constellation Brands has announced divestiture of nearly 30 low-end brands from the wine & spirits portfolio, the segment’s growth might take time.

Further, the company issued an unimpressive outlook for fiscal 2020 owing to impacts from the adjustments related to losses from the Canopy Growth deal (mostly higher interest expense) and other activities as well as the wine and spirits divestitures. This, in turn, might hurt Constellation Brands’ performance in first-quarter fiscal 2020.

What the Zacks Model Predicts

Our proven model conclusively shows that Constellation Brands is likely to beat earnings estimates in first-quarter fiscal 2020. A stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. 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 #2 and an Earnings ESP of +4.42%.

Other Stocks Poised to Beat Earnings Estimates

Here are some other companies that you may want to consider as our model shows that these too have the right combination to deliver an earnings beat:

General Mills, Inc. GIS has an Earnings ESP of +1.18% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Helen of Troy Limited HELE has an Earnings ESP of +0.60% and a Zacks Rank #2.

Snap-on Incorporated SNA has an Earnings ESP of +0.58% and a Zacks Rank #3.

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.

This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.

See their latest picks free >>


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
 
Constellation Brands Inc (STZ) : Free Stock Analysis Report
 
Helen of Troy Limited (HELE) : Free Stock Analysis Report
 
General Mills, Inc. (GIS) : Free Stock Analysis Report
 
Snap-On Incorporated (SNA) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research