Constellation Brands (NYSE: $STZ) is a leading beverage alcohol company with a diversified number of brands, such as Corona, Modelo Especial, and Pacifico. In addition to beer, the company also has a significant presence in the wine and spirits segments, with brands such as Robert Mondavi, Meiomi, and Casa Noble. The company is among the leading importers, marketers, and producers of spirits, beer, and wine. Moreover, it is ranked 430th on the Fortune 500.
Constellation Brands reported fiscal third-quarter earnings results on Friday, revealing that the overall sales figures fell short of expectations. The year-to-year revenue is up by 1.4%, totaling it to $2.47 billion.
The company achieved a non-GAAP profit of $3.19 per share in the most recent quarter, showing improvement from the $2.83 per share profit recorded in the same quarter of the previous year.
Modelo Still Remains The Primary Catalyst for Constellation Sells Growth
Constellation Brands is the parent company of the Modelo beer brand, and it is still the company’s main revenue generator. The company has increased revenue to $2.47B, an increase of +1.2% year over year, however they fell short of sales expectations by $70M revenue.
Filippo Falorni, Citi Vice President of Equity Research, says, “The Modelo Especial brand is the largest brand in the beer division that grew depletions — which is a measure of volumes — about 12%. Overall, the beer segment grew 8.2% depletions, which was above what the consensus was expecting.” He further mentions, “Again, driven mainly by Modelo Especial, but also strong results in the other brands, like Pacifico growing 19%, Modelo Chelada growing 22%.”
Constellation’s beer category has the largest revenue and is also the profit driver for the company. The division reported a 4% increase in net sales and anticipates a growth rate of 8-9% for fiscal 2024. This growth is mainly attributed to the sustained momentum in the Modelo brand.
Constellation Brands CEO Bill Newlands said, “Our Beer Business achieved excellent Q3 results driven by our industry-leading brands. Modelo Especial delivered double-digit volume growth and continued to extend its position as the #1 beer in the U.S.”
Constellation Brands – Core Insights from Q3 FY2024
The company’s gross margin surpassed Wall Street’s estimation. However, the revenue estimate couldn’t outperform due to bad performance in the Wine and Spirits segments. Furthermore, Constellation Brands also performed well in the recent quarter, slightly exceeding analyst expectations for earnings per share (EPS).
In the highlights of Q3 of fiscal year 2024, the market capitalization was $44.51 billion. The revenue is $2.47 billion, but it couldn’t meet the analyst expectations by 2.6%. Organic revenue is up by 2% year-to-year, while free cash flow is $394.4 million, down by 39.4% compared to the previous quarter.
Wall Street expects the sales to accelerate from this quarter and grow by 7.6% in the upcoming 12 months.
Constellation Brands Stock Update: STZ
$STZ is currently trading at $247.53 per share, up by 2.6% from the previously closed price of $242.33 per share. When writing this article, the market cap was $45.463B, with a volume of2,630,428. Critical areas of support and resistance have been labeled on the Constellation Brands (NASDAQ: $STZ) chart below:
Is it Worth Investing in STZ?
Constellation Brands’ third quarter wasn’t up to the mark, although the revenue rose by 2% year-to-year. Moreover, Wall Street also provided an estimate of over 7.6% this year, making this stock a lucrative investment. Investors considering Constellation Brands (NYSE: STZ) should weigh the overall positive outlook for the stock, driven by the strong performance of its beer segment, against the challenges faced in other segments.
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