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Can Constellation (STZ) Beat Q2 Earnings on Segmental Gains?
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Constellation Brands, Inc. (STZ - Free Report) is scheduled to release second-quarter fiscal 2024 results on Oct 5, 2023. The alcoholic beverage bigwig is expected to deliver top-and-bottom-line growth in the to-be-reported quarter.
The Zacks Consensus Estimate for the company’s fiscal second-quarter earnings is pegged at $3.38 per share, indicating 6.6% growth from the year-ago quarter’s reported figure. The consensus mark has moved up by a penny in the past seven days. The consensus mark for revenues is pegged at $2.85 billion, suggesting a 7.3% increase from the prior-year quarter’s reported figure.
In the last reported quarter, the alcohol behemoth delivered an earnings surprise of 2.8%. Its bottom line beat estimates by 4.4%, on average, over the trailing four quarters.
Constellation Brands has been witnessing momentum due to strength in its beer portfolio, with the continued robust performances of Modelo Especial, the Modelo Chelada brands, Corona Extra, Pacifico and Modelo Oro. The company’s premiumization strategy has been playing out well, as evidenced by the accelerated growth of Power Brands.
Constellation Brands’ second-quarter fiscal 2024 performance is expected to have gained from continued growth in the beer business and the robust consumer demand for its portfolio of premium, high-end products. The beer segment has also been witnessing gains from premiumization, driven by growth in traditional beer as well as the flavor 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.
STZ’s wine & spirits business has been benefiting from its premiumization strategy focused on making investments to fuel the 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, has been a key growth driver.
Our model estimates sales growth of 5% for the Beer business and 12.6% for the wine & spirits business in the fiscal second quarter.
However, Constellations Brands’ margins have been witnessing the impacts of ongoing inflation. As part of this, the company has been witnessing higher packaging and raw material costs, which are likely to have persisted in the fiscal second quarter. Higher overhead costs related to its brewery expansion and increased logistics costs related to higher shipment volumes are also expected to have weighed on margins.
We expect the adjusted cost of goods sold to increase 4.7% year over year to $1,343 million in the fiscal second quarter, mainly due to elevated packaging and input costs. As a percentage of sales, we expect adjusted SG&A expenses to increase 80 basis points to 19.2% in the fiscal second quarter. In dollar terms, SG&A expenses are expected to increase 10.7% year over year to $542.2 million.
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 #2 and an Earnings ESP of -0.75%.
Stocks With the 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:
Lamb Weston (LW - Free Report) currently has an Earnings ESP of +4.24% and a Zacks Rank of 2. The company is likely to register top-and-bottom-line growth when it reports first-quarter fiscal 2024 results. The Zacks Consensus Estimate for LW’s quarterly earnings has moved up by a penny in the past 30 days to $1.08 per share. The consensus mark indicates 44% growth from the year-ago quarter’s reported number. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Lamb Weston’s quarterly revenues is pegged at $1.59 billion, which suggests growth of 41.2% from the figure reported in the prior-year quarter. LW delivered an earnings beat of 44.8%, on average, in the trailing four quarters.
Conagra Brands (CAG - Free Report) currently has an Earnings ESP of +0.87% and a Zacks Rank of 3. The company is likely to register increases in the top and bottom lines when it reports first-quarter fiscal 2024 results. The Zacks Consensus Estimate for quarterly earnings has remained unchanged in the last 30 days at 60 cents per share. The consensus estimate indicates 5.3% earnings growth from the year-ago quarter's reported number.
The Zacks Consensus Estimate for Conagra’s quarterly revenues is pegged at $2.95 billion, suggesting growth of 1.7% from the figure reported in the prior-year quarter. CAG has delivered an earnings surprise of 13.6%, on average, in the trailing four quarters.
Coca-Cola FEMSA (KOF - Free Report) currently has an Earnings ESP of +8.21% and a Zacks Rank of 3. The company is likely to register increases in the top line when it reports third-quarter 2023 results. The Zacks Consensus Estimate for quarterly revenues is pegged at $3.51 billion, which suggests a rise of 24.5% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for quarterly earnings has moved down 2.2% to $1.34 per share in the past 30 days. However, the consensus mark for KOF’s earnings indicates growth of 30.1% from the year-ago quarter’s reported number. KOF has delivered a negative earnings surprise of 21.1%, on average, in the trailing four quarters.
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Can Constellation (STZ) Beat Q2 Earnings on Segmental Gains?
Constellation Brands, Inc. (STZ - Free Report) is scheduled to release second-quarter fiscal 2024 results on Oct 5, 2023. The alcoholic beverage bigwig is expected to deliver top-and-bottom-line growth in the to-be-reported quarter.
The Zacks Consensus Estimate for the company’s fiscal second-quarter earnings is pegged at $3.38 per share, indicating 6.6% growth from the year-ago quarter’s reported figure. The consensus mark has moved up by a penny in the past seven days. The consensus mark for revenues is pegged at $2.85 billion, suggesting a 7.3% increase from the prior-year quarter’s reported figure.
In the last reported quarter, the alcohol behemoth delivered an earnings surprise of 2.8%. Its bottom line beat estimates by 4.4%, 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 has been witnessing momentum due to strength in its beer portfolio, with the continued robust performances of Modelo Especial, the Modelo Chelada brands, Corona Extra, Pacifico and Modelo Oro. The company’s premiumization strategy has been playing out well, as evidenced by the accelerated growth of Power Brands.
Constellation Brands’ second-quarter fiscal 2024 performance is expected to have gained from continued growth in the beer business and the robust consumer demand for its portfolio of premium, high-end products. The beer segment has also been witnessing gains from premiumization, driven by growth in traditional beer as well as the flavor 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.
STZ’s wine & spirits business has been benefiting from its premiumization strategy focused on making investments to fuel the 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, has been a key growth driver.
Our model estimates sales growth of 5% for the Beer business and 12.6% for the wine & spirits business in the fiscal second quarter.
However, Constellations Brands’ margins have been witnessing the impacts of ongoing inflation. As part of this, the company has been witnessing higher packaging and raw material costs, which are likely to have persisted in the fiscal second quarter. Higher overhead costs related to its brewery expansion and increased logistics costs related to higher shipment volumes are also expected to have weighed on margins.
We expect the adjusted cost of goods sold to increase 4.7% year over year to $1,343 million in the fiscal second quarter, mainly due to elevated packaging and input costs. As a percentage of sales, we expect adjusted SG&A expenses to increase 80 basis points to 19.2% in the fiscal second quarter. In dollar terms, SG&A expenses are expected to increase 10.7% year over year to $542.2 million.
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 #2 and an Earnings ESP of -0.75%.
Stocks With the 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:
Lamb Weston (LW - Free Report) currently has an Earnings ESP of +4.24% and a Zacks Rank of 2. The company is likely to register top-and-bottom-line growth when it reports first-quarter fiscal 2024 results. The Zacks Consensus Estimate for LW’s quarterly earnings has moved up by a penny in the past 30 days to $1.08 per share. The consensus mark indicates 44% growth from the year-ago quarter’s reported number. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Lamb Weston’s quarterly revenues is pegged at $1.59 billion, which suggests growth of 41.2% from the figure reported in the prior-year quarter. LW delivered an earnings beat of 44.8%, on average, in the trailing four quarters.
Conagra Brands (CAG - Free Report) currently has an Earnings ESP of +0.87% and a Zacks Rank of 3. The company is likely to register increases in the top and bottom lines when it reports first-quarter fiscal 2024 results. The Zacks Consensus Estimate for quarterly earnings has remained unchanged in the last 30 days at 60 cents per share. The consensus estimate indicates 5.3% earnings growth from the year-ago quarter's reported number.
The Zacks Consensus Estimate for Conagra’s quarterly revenues is pegged at $2.95 billion, suggesting growth of 1.7% from the figure reported in the prior-year quarter. CAG has delivered an earnings surprise of 13.6%, on average, in the trailing four quarters.
Coca-Cola FEMSA (KOF - Free Report) currently has an Earnings ESP of +8.21% and a Zacks Rank of 3. The company is likely to register increases in the top line when it reports third-quarter 2023 results. The Zacks Consensus Estimate for quarterly revenues is pegged at $3.51 billion, which suggests a rise of 24.5% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for quarterly earnings has moved down 2.2% to $1.34 per share in the past 30 days. However, the consensus mark for KOF’s earnings indicates growth of 30.1% from the year-ago quarter’s reported number. KOF has delivered a negative earnings surprise of 21.1%, on average, in the trailing four quarters.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.