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Constellation Brands (STZ) Earnings Preview

by | Jun 28, 2022

Constellation Brands (STZ) will report earnings on 6/30 before the open with the Street looking for $2.53 on $2.16B in sales. Next quarter is guided to $2.83/$2.51B while the FY is $11.13 and $9.39B. STZ shares have a mixed history closing lower in two of the last three but higher in seven of the last twelve. The average closing move for shares is 3.5% and the max move was 6.25%. The current implied move is 3.8%. STZ shares have held up well recently although a bit extended into the report. The current weekly bull flag building under $255/$260 can extended up to $295/$300 on a breakout move with shares sitting at multi-year highs. The $44.8B company trades 19.27X earnings, 5X sales, and 40.5X FCF with a 1.3% yield. STZ is a leading global brewer of beer, wine and other spirits under notable brands like Corona, Modelo, Pacifico, and others. They also expanded into seltzer and cannabis, the latter through an investment in Canopy Growth, although both categories have been slowing recently. Beer sales have remained a strong point in 2022 despite supply shortages and rising inflationary costs which have weighed on their overall outlook (STZ, however, has notably outperformed peers like Boston Beer and AB InBev in terms of operating margins over the last year). Modelo and Corona continue to exceed industry-wide sales as well with the former becoming one of the top-selling brands in the high-end category according to analysts at IRI. And, the company could announce capital spending plans this week which would help boost capacity further. Analysts have an average target for shares of $265 with a Street High $316. Goldman positive on 6/28 expecting a beat from the company following feedback from beer distributor contacts. The analyst now expects a possible fiscal 2023 topline guidance raise as underlying demand for Constellation’s brands remains robust and management could choose to pull on the pricing lever ever so slightly more. Jefferies positive on the name on 6/9 as recently-released import data from the Beer Institute showed volumes for Mexican beer imports in the U.S. grew +23.8% year-over-year in March and 10.6% year-over-year in April, which is supportive of their positive view on Constellation Brands. Short interest is 1.67%. Hedge fund ownership fell 8%.