Shares of Constellation Brands (STZ - Free Report) fell 1% during regular market hours Wednesday, the last trading period before the alcohol giant posts its latest quarterly earnings report. Investors clearly displayed some hesitation ahead of the announcement Thursday morning, but this report is certainly still one to watch.
Constellation Brands contributed to one of the biggest stories on Wall Street during the third quarter, tossing its name in the ring of companies betting big on marijuana. The maker of Corona, Modelo, and Svedka upped its investment in Canopy Growth (CGC - Free Report) , a major Canadian marijuana producer, to 38% and revealed that it is interested in developing cannabis-infused beverages.
It makes sense that Constellation wants to ensure its status as a purveyor of the “buzz,” wherever that intoxication may come from. But marijuana drinks are a future-minded growth idea—not something that is likely to have a material effect on the company’s performance right now.
Nevertheless, Constellation Brands will hope that it can satisfy investors with its report tomorrow, as its stock has struggled to generate much momentum lately. Shares are down more than 6% on the year, and earnings growth has been tepid.
Of course, there’s no better way to get the ball rolling again than with a stronger-than-expected earnings report. So what kind of expectations is Constellation Brands up against? Let’s take a closer look.
Constellation Brands will report its Q2 fiscal 2019 results before the market opens Thursday. Here’s what analysts are projecting, according to our Zacks Consensus Estimates.
Earnings: STZ is expected to see earnings of $2.58 per share. These results would represent year-over-year growth of 4.5%.
Estimate Revisions: Constellation has witnessed four revisions to its earnings estimates for the soon-to-be-reported quarter within the past 60 days. Two of these have been positives; two have been negative. The Zacks Consensus has shed a penny in that time.
This type of mixed sentiment and downtrend in the consensus is not a positive indicator leading up to a report.
Revenue: Consensus estimates haveConstellation’s Q2 revenue pegged at $2.25 billion. This would mark growth of about 7.9% from the prior-year period.
Some investors are rightfully excited about Constellation’s investment in the marijuana market, and that move could reap rewards for investors in the future. However, the outlook for tomorrow’s report is unclear. Shares have struggled to move higher this year, and there is no universally-positive analyst sentiment to speak of.
What’s worse, STZ is sporting a Zacks Rank #5 (Strong Sell). This is because the company has witnessed six negative revisions to its full-year EPS estimates. However, the stock could bounce back if it is able to surprise investors with great results.
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