Constellation Brands Inc., a leading international producer alcoholic beverages, reported this morning its FQ4 net income rose 17% and sales rose 8% on strong wine and beer sales in the U.S. and Canada. Net income went from $58.2 million ($0.24/share) to $70.2 million ($0.29/share) on a sales rise from $1.3 billion to $1.42 billion. EPS excluding restructuring expenses were $0.35, beating analyst estimates of $0.34/share, while sales revenues beat estimates of $1.1 billion. For fiscal 2008, Constellation forecasts earnings of $1.30-1.40/share on a comparable basis, low single-digit sales growth, low single-digit incremental growth from its acquisitions of Vincor and Svedka, and net sales growth of 13-15%. Analysts are calling for EPS of $1.36 on revenue of $4.32 billion. Of note, imported beer sales jumped 31%; Constellation gets about 70% of its sales from wine, 24% from beer, and 6% from spirits. CEO Richard Sands: "While we had a solid year of organic net sales growth, our earnings performance was somewhat challenged by competitive conditions in the U.K. market." On March 1, the company issued a warning saying earnings would be $1.30-1.40/share (at the times Street estimates were for $1.83) and that sales would drop 12-14%. Shares are down 28% this year, but closed up $0.03 to $20.82 in trading yesterday. Constellation is the year's second worst performer on the S&P 500 Index following AMD.
Sources: Press Release, MarketWatch, Bloomberg
Commentary: Constellation Brands Vs. Diageo: A Good Stock Picking Study • Word on the Grapevine: Wine Stocks • Constellation Issues F2008 Warning, Shares Plummet
Stocks/ETFs to watch: Constellation Brands Inc. (NYSE:STZ). Competitors: Diageo plc (NYSE:DEO), Brown-Forman Corp. (BF.b), Fortune Brands Inc. (FO), Coors Brewing Co. (NYSE:TAP), Anheuser-Busch Companies Inc. (NYSE:BUD). ETFs: Consumer Discretionary SPDR ETF (NYSEARCA:XLY), PowerShares Dynamic Consumer Discretionary (NYSEARCA:PEZ), Vanguard Consumer Discretionary VIPERs (NYSEARCA:VCR)
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