Monday, July 7, 2014

Constellation Brands, Inc. (STZ) Q1 Earnings Preview: Drink Up

Constellation Brands, Inc. (NYSE:STZ) will report financial results for its fiscal first quarter ended May 31, 2014, on Wed., July 2, 2014, before the open of the U.S. markets.  A conference call to discuss the financial results and outlook will be hosted by President and Chief Executive Officer Rob Sands and Executive Vice President and Chief Financial Officer Bob Ryder at 10:30 a.m. eastern time, July 2, 2014.

Wall Street anticipates that the alcohol-beverage company will earn $0.93 per share for the quarter, which is a lot more than last year's profit of $0.38 per share. iStock expects STZ to top Wall Street's consensus number, the iEstimate is $0.94.

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Sales, like earnings, are expected to explode higher, increasing 111.8% year-over-year (YoY). Constellation Brands' consensus revenue estimate for Q1 is $1.43 billion; a lot more than last year's $673.4 million.

Constellation Brands, Inc., together with its subsidiaries, produces, imports, and markets beer, wine, and spirits in the United States, Canada, Mexico, New Zealand, and Italy.

The company sells wine across various categories, including table wine, sparkling wine, and dessert wine. Its wine brands include Arbor Mist, Black Box, Blackstone, Clos du Bois, Estancia, Franciscan Estate, Inniskillin, Kim Crawford, Mark West, Mount Veeder, Nobilo, Ravenswood, Rex Goliath, Robert Mondavi, Ruffino, Simi, Toasted Head, and Wild Horse; and Spirits Brands comprise Black Velvet Canadian Whisky and Svedka Vodka.

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Mexican beer is the reason for STZ's revenue explosion. A little more than a year ago, the company acquired full ownership of Grupo Modelo's U.S. beer business from Anheuser Busch Inbev SA (ADR) (NYSE:BUD).

The brands include Modelo, Corona Extra, Corona Light, Modelo Especial, Negra Modelo and Pacifico. The Mexican beers essentially doubled STZ's sales.

With or without south of the border beer, Constellation Brands has a strong history of delivering bullish earnings surprises. The spirits company topped the street's view 14 of the last 16 quarters by an average of 16.91%, ranging from 2.56% to 81.58% more than expected. For the remaining two, earnings missed by -7.32% once and hit the Wall Street's consensus once.

The stellar track record translated into shares heading higher in the days surrounding nine of the last 16 quarters. On average, buyers bid STZ higher by 7.8% in the days surrounding the nine bullish quarterly checkups.

Once, the stock traded flat with six red reactions. Constellation Brands typically dipped -5.68% when EPS-driven price sensitivity was negative.

Overall: The iEstimate and Constellation Brands, Inc. (NYSE:STZ) suggest a small bullish surprise. The last four July announcements, while split between two green and red reactions, favored bulls with moves of 5.7% and 27.3%. Meanwhile, the two selloffs were limited at -2.2% and -2.5%. 

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