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Factors Influencing Constellation Brands' (STZ) Q4 Earnings

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Constellation Brands, Inc. (STZ - Free Report) is scheduled to release fourth-quarter fiscal 2020 results on Apr 3, 2020. In the last reported quarter, the alcohol behemoth delivered a positive earnings surprise of 16.3%. Moreover, its bottom-line beat estimates by 8.7%, on average, over the trailing four quarters.

The Zacks Consensus Estimate for the company’s fiscal fourth-quarter earnings stands at $1.62, indicating a 12% decline from the year-ago quarter’s reported figure. Further, the consensus mark has moved down by a penny in the past 30 days. Nonetheless, the consensus mark for revenues is pegged at $1,840 million, suggesting a 2.4% increase from the prior-year quarter’s reported figure.

Key Factors to Note

Constellation Brands has been witnessing strength in the beer business, owing to a rise in shipment volume and favorable depletion trends. Continued strength in the Modelo and Corona brand families as well as continued innovation has been driving solid portfolio depletions and market share gains.

Encouragingly, the company on its third-quarter earnings call expected depletion growth in high-single digits for the fourth quarter. For fiscal 2020, it anticipates net sales growth of 7-8% for the beer segment.

Further, the company remains pleased with the performance of the Corona brand family, which is touted to be the most loved brand among Hispanics. Notably, Corona Extra delivered 5% sales growth for the four weeks ended Feb 16, per recent IRI retail trends. Also, the depletion trend for the brand, starting from the first two months of 2020 through Feb 26, surpassed the year-over-year trend. Apart from these, the company stated that all business categories have been witnessing a sturdy sales trend so far this year.

Moreover, Constellation Brands’ constant focus on brand building and initiatives to include new products bodes well. Also, the company’s premiumization strategy has been gaining traction as its wine and spirits power brands (sold at price points of greater than $11) have continued to outpace competitors in the high-end market. In the last reported quarter, management anticipated steady progress on its premiumization strategy throughout fiscal 2020, with mid-single-digit revenue growth expected for power brands in the fourth quarter.

Constellation Brands Inc Price and EPS Surprise

 

Zacks Model

Our proven model predicts an earnings beat for Constellation Brands this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. 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 and an Earnings ESP of +3.72%. 

Other Stocks Poised to Beat Earnings Estimates

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

Kimberly-Clark Corporation (KMB - Free Report) has an Earnings ESP of +1.76%. and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

McCormick & Company (MKC - Free Report) has an Earnings ESP of +0.77% and a Zacks Rank #3.

Phillip Morris International (PM - Free Report) currently has an Earnings ESP of +0.15% and a Zacks Rank #3.

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