[ad_1]
Constellation Brands Inc. posted better-than-expected fiscal first-quarter earnings on Friday, boosted by strength in its beer business where sales rose 11%.
But the stock still moved lower and was last down 2%, as expectations were high heading into the earnings, according to Truist analyst Bill Chappell.
The company kept its fiscal 2024 guidance unchanged, despite the beat, while beer sales guidance was in line with long-term targets, he wrote in a note to clients.
“While we believe it is prudent to leave guidance unchanged following F1Q, we believe given the recent headlines, scanner data performance, and stock performance (+6.0% vs SPX +4.5% over past month) that investor expectations were a bit high heading into the print, and we would expect the stock to open DOWN this morning on the relatively muted results,” said the analyst.
Truist has a hold rating on the stock.
The distributor of Modelo Especial, which recently replaced AnheuserBusch InBev S.A’s
BUD,
Bud Light as the bestselling beer in the U.S., Corona and the recently launched Modelo Oro, posted net income of $135.9 million, or 74 cents a share, for the quarter to May 31, down from $389.5 million, or $2.09 a share, in the year-earlier period.
Adjusted per-share earnings came to $2.91, ahead of the $2.83 FactSet consensus.
Sales rose 7% to $2.525 billion from $2.343 billion a year ago, also ahead of the $2.474 billion FactSet consensus.
Beer sales rose 11%, driven by a 7.5% increase in shipments. Constellation
STZ,
has recently gained market share due to the backlash against Bud Light that began in April in response to its partnership with trans influencer Dylan Mulvaney.
See now: Anheuser-Busch InBev share price skids as Bud Light and other Budweiser brand sales deteriorate
Beer depletions, a metric that measures the number of cases sold by distributors to retailers, rose 5.5%, although that was down from 6.3% in the fourth quarter, and below the growth of 8% to 9% seen in late 2021 and early 2022.
Operating margin at the beer business fell 220 basis points as sales growth and operational and other efficiency improvements were offset by continued inflationary pressures that pushed raw material prices higher; increased marketing spend across core and new products; and incremental depreciation and operating costs from brewery capacity expansions.
Still, executives were upbeat about the business.
“The solid top-line performance of our Beer Business has reaffirmed our confidence in our annual plans and objectives, and we expect our Wine and Spirits Business to accelerate toward its fiscal ’24 outlook throughout the balance of the year,” Chief Financial Officer Garth Hankinson said in a statement.
The company is still expecting fiscal 2024 EPS of $9.35 to $9.65 or $11.70 to $12.00, excluding its investment in Canadian cannabis company Canopy Growth Corp.
CGC,
WEED,
which is suffering a liquidity crisis and recently added “going concern” language to a regulatory filing.
For more, read: Canopy Growth cuts 1,200 jobs in past year and issues ‘going concern’ warning as analyst eyes solvency of cannabis company
The FactSet consensus is for EPS of $11.66.
Beer sales are expected to grow 75 to 9%, wine and spirits sales are expected to range from a decline of 0.5% to an increase of 0.5% and free cash flow is expected to range from $1.2 billion to $1.3 billion.
The stock has gained 6.5% in the year to date, while the S&P 500
SPX,
has gained 14.5%.
[ad_2]
Source link
