Constellation Brands Inc. Earnings: Margins Expand Again, but Profit Drops

S&P 500 (NYSE:SPY) component Constellation Brands Inc. (NYSE:STZ) saw profit fall amid falling revenue. 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 Third Quarter

Results: Net income for Constellation Brands Inc. fell to $104.8 million (52 cents per share) vs. $139.3 million (65 cents per share) a year earlier. This is a decline of 24.8% from the year earlier quarter.

Revenue: Fell 27.5% to $700.7 million from the year earlier quarter.

Actual vs. Wall St. Expectations: STZ fell short of the mean analyst estimate of 52 cents per share. It fell short of the average revenue estimate of $720.4 million.

Quoting Management: “Our third quarter results were generally consistent with our expectations for the business and reflect continuing progress particularly in the areas of free cash flow generation and improving depletion trends for our U.S. wine and spirits business. I am especially pleased with the ongoing momentum from our new product development and brand building initiatives,” 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 four percentage points to 40.4% from the year earlier quarter. Over that span, margins have grown on average 3.9 percentage points per quarter on a year-over-year basis.

Revenue has fallen for the past three quarters. In the second quarter, revenue declined 20% to $690.2 million while the figure fell 19.3% in the first quarter from the year earlier.

Looking Forward: For next quarter, analysts have a more positive outlook about the company’s expected results. The average estimate for the fourth quarter is 37 cents per share, up from 34 cents ninety days ago. The average estimate for the fiscal year is $2.06 per share, a rise from $1.95 ninety days ago.

Competitors to Watch: Castle Brands Inc. (AMEX:ROX), Diageo plc (NYSE:DEO), Willamette Valley Vineyards, Inc. (NASDAQ:WVVI), 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).

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

 

To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com