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Constellation Brands (STZ) Q1 Earnings: What's in the Cards?

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Constellation Brands, Inc. (STZ - Free Report) is scheduled to report first-quarter fiscal 2019 results on Jun 29.

Notably, the company looks quite appeasing on the earnings front, having delivered 14th consecutive beat in fourth-quarter fiscal 2018. Also, this was the company’s 19th straight quarter of year-over-year bottom-line growth. In the trailing four quarters, Constellation Brands pulled off an average positive earnings surprise of 12.2%.

The Zacks Consensus Estimate for first-quarter earnings is pegged at $2.44, which portrays an improvement of 4.3% from the year-ago quarter. However, the estimate moved south by 4 cents in the past 30 days.

Constellation Brands Inc Price, Consensus and EPS Surprise

Constellation Brands Inc Price, Consensus and EPS Surprise | Constellation Brands Inc Quote

Let’s delve deep to see how things are shaping up prior to the quarterly earnings release.

What You Should Know

Constellation Brands is benefiting from its robust brand portfolio, strategic initiatives and strength in beer business. Moreover, its consistent focus on brand building and initiatives to include new products are commendable. Also, its top line has been gaining from solid depletions in both beer and wine & spirits businesses.

Over the years, Constellation Brands’ beer business has been performing exceeding well. In fact, the solid depletions in the beer business mainly stemmed from strength in Modelo and Corona brand families. Further, the launch of Corona Familiar new packages in regionally-expanded markets that positioned it among the top 10 high-end beer share gainers, proved conducive to the company. These factors are expected to drive Constellation Brands’ top line and boost profitability in first-quarter fiscal 2019.

For the to-be-reported quarter, analysts polled by Zacks envision total revenues to come in at $2.05 billion, which is roughly 5.8% higher than the year-ago quarter.

In the past three months, Constellation Brands has gained 5.5% against the industry’s decline of 7.6%. This outperformance can be attributed to the company’s robust strategic actions.

Additionally, management remains encouraged by significant market share gains, margin expansion, strong free cash flow and solid execution. As a result, it provided an upbeat outlook for fiscal 2019, which boosts optimism for first-quarter results.

However, stiff competition from other well-established players in the industry along with higher taxes remains concerns. This, in turn, might impact the company’s margins and hurt profitability. Also, higher debt position may adversely affect the company’s creditworthiness and make it more susceptible to macroeconomic headwinds.

Zacks Model

Our proven model does not show that Constellation Brands is likely to beat earnings estimates this quarter. This is because 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 #3, which increases the predictive power of an earnings beat. However, the company’s Earnings ESP of 0.00% make surprise prediction difficult.

Stocks Poised to Beat Earnings Estimates

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Helen of Troy Limited (HELE - Free Report) has an Earnings ESP of +3.57% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Post Holdings, Inc. (POST - Free Report) has an Earnings ESP of +1.33% and a Zacks Rank of 3.

The Coca-Cola Company (KO - Free Report) has an Earnings ESP of +0.16% and a Zacks Rank #3.

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