Constellation Brands Earnings: Beats the Street on Profit Rise

S&P 500 (NYSE:SPY) component Constellation Brands Inc. (NYSE:STZ) reported net income above Wall Street’s expectations for the second quarter. Constellation Brands is a wine company with operations in the United States, Canada, the United Kingdom, Australia and New Zealand.

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Constellation Brands Earnings Cheat Sheet for the Second Quarter

Results: Net income for the beverage company rose to $162.7 million (76 cents per share) vs. $91.3 million (39 cents per share) in the same quarter a year earlier. This marks a rise of 78.2% from the year earlier quarter.

Revenue: Fell 20% to $690.2 million from the year earlier quarter.

Actual vs. Wall St. Expectations: STZ beat the mean analyst estimate of 66 cents per share. It beat the average revenue estimate of $667.9 million.

Quoting Management: “The underlying fundamentals of our business remain solid. We are investing additional resources behind key brands and routes to market while implementing changes to achieve cost savings and drive operational efficiencies. I am particularly pleased with our quarterly results in the areas of free cash flow generation and margin improvement,” said Rob Sands, president and chief executive officer, Constellation Brands.

Key Stats:

Last quarter marked the fifth consecutive quarter of gross margins expanding as the company’s gross margin expanded 4.6 percentage points to 41% from the year earlier quarter. Over that span, margins have grown on average 3.3 percentage points per quarter on a year-over-year basis.

The company has now topped analyst estimates for the last four quarters. It beat the mark by 2 cents in the first quarter, by 9 cents in the fourth quarter of the last fiscal year, and by 4 cents in the third quarter of the last fiscal year.

Revenue has fallen in the past two quarters. In the first quarter, revenue declined 19.3% to $635.3 million from the year earlier quarter.

Looking Forward: Expectations for the company’s next quarter results are lower than they have been. Over the past sixty days, the average estimate for third quarter has fallen from 57 cents per share to 56 cents. The average estimate for the fiscal year is $1.96 per share, falling from $1.97 thirty days ago.

Competitors to Watch: Castle Brands Inc. (AMEX:ROX), Diageo plc (NYSE:DEO), Willamette Valley Vineyards, Inc. (NASDAQ:WVVI), Anheuser-Busch InBev (NYSE:BUD), The Boston Beer Co (NYSE:SAM), Molson Coors Brewing Co. (NYSE:TAP), Craft Brewers Alliance, Inc. (NASDAQ:HOOK), Compania Cervecerias Unidas S.A. (NYSE:CCU), Scheid Vineyards Inc. (SVIN), Heineken N.V. (HINKY), and Fortune Brands, Inc. (NYSE:FO) (NYSE:BEAM).

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(Source: Xignite Financials)