Companies and Brands

What to Expect When Constellation Brands Reports Wednesday Morning

Chris Lange

Published: January 7, 2020 9:50 am

Last Updated: January 30, 2020 11:30 am

Constellation Brands Inc. (NYSE: STZ) is scheduled to release its fiscal third-quarter financial results before the markets open on Wednesday. The consensus estimates are calling for $1.83 in earnings per share (EPS) and $1.95 billion in revenue. The same period of last year reportedly had $2.37 in EPS and $1.97 billion in revenue.

One thing that might hold back Constellation Brands earnings this quarter is its investment in Canopy Growth. In the previous quarter, the company actually cut its guidance for the fiscal 2019 and fiscal 2020 based on Canopy Growth’s recent underperformance. It’s likely this quarter that Constellation Brands will take a write-down for the stock as well.

Constellation Brands has invested over $4 billion in Canopy Growth, banking on the proposed legalization of recreational weed in several countries. However, Canopy has been reporting losses and said in August that it would need another three to five years to turn profitable.

Outside of the issues with cannabis, the beer business appears to be booming. Bill Newlands, president and CEO of Constellation Brands, previously commented:

The winning streak for our beer business continues with Modelo Especial generating the most growth in the entire U.S. beer category, while Corona remains the #1 high-end beer brand family. This powerful combination gives us confidence in high single digit beer growth for years to come. Our Wine & Spirits innovation pipeline is primed to launch impactful product introductions, as we head into the key selling season this fall.

Excluding Tuesday’s move, Constellation Brands had underperformed the broad markets, with its stock up 14% in the past 52 weeks. Over the past six months, the stock was actually down 5%.

Here’s what a few analysts had to say ahead of the report:

• Morgan Stanley has an Equal Weight rating and a $208 price target.
• Deutsche Bank has a Hold rating with a $196 target price.
• Credit Suisse rates it as Outperform with a $233 price target.
• Cowen has a Buy rating with a $240 target price.
• Evercore ISI has a Buy rating and a $236 price target.

Shares of Constellation Brands were last seen down 1% at $188.39, in a 52-week range of $150.37 to $214.48. The consensus price target is $224.16.