Earnings Preview: Constellation Brands, Inc.

Jun.26.12 | About: Constellation Brands, (STZ)

Constellation Brands, Inc. (NYSE:STZ) is a wine company. The company is a marketer of imported beer in the United States through its investment in Crown Imports, LLC (Crown Imports), a joint venture with Grupo Modelo, S.A.B. de C.V. (Modelo), pursuant to which Modelo's Mexican beer portfolio (the Modelo Brands) are imported, marketed and sold by the joint venture in the United States.

Constellation Brands is scheduled to report its first quarter earnings results on June 29, 2012, before market open.

Technical Overview

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Constellation Brands has a market cap of $3.66 billion and it is currently trading around $19.37 with a 52 week range of $16.42 to $24.87. The stock has fallen 6.29% year to date. The following table provides the key financial ratios for Constellation Brands:

Key Ratio Value
Current Ratio 1.7
PEG 1.03
P/E 10.33
Forward P/E 8.82
Profit Margin 16.77%
Return On Assets (ROA) 6.23%
Return On Equity (ROE) 17.02%
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Recent News

  • On June 13, 2012, Vincor Canada, the country's leading domestic wine producer announced that the company will now operate as "Constellation Brands." The change is part of a global initiative by Constellation Brands, Vincor's parent company, to align its operating companies in the U.S., Canada and New Zealand under a common name to better reflect its strategy to move to a more unified organization.
  • On May 18, 2012, Constellation Brands announced that it is nearing completion of the second phase of its distribution transition with the signing of multi-year agreements with Republic National Distributing Company (RNDC), Young's Market Company, Johnson Brothers and Horizon Beverage Company.
  • On May 3, 2012, Constellation Brands announced that it has entered into a new senior credit facility. The new agreement includes an $850 million five-year revolving credit facility, a five-year $550 million term loan A and a seven-year $250 million term loan A-1.
  • On May 3, 2012, Constellation Brands announced that representatives from the company and Crown Imports, a joint venture with Grupo Modelo, will ring the closing bell at the New York Stock Exchange on May 4, 2012 in honor of Cinco de Mayo.
  • On April 17, 2012, Constellation Brands announced that it has completed the sale of $600 million aggregate principal amount of 6% Senior Notes due 2022.

Analyst Guidance and Earnings History

The first quarter revenues are expected to be $645.50 million when compared to $635.00 million for the same quarter last year. Earnings per share for the first quarter are expected to be 39 cents a share, up from a 39 cents a share in the year-ago period.

The average price target from analyst for Constellation Brands is $25 with average rating is OVERWEIGHT.

Out of the last 4 quarters, Constellation Brands has met or exceeded the EPS estimates 3 times. The following chart shows the Analyst estimates history and the actual EPS results:Click to enlarge

The following chart shows the annual summary of Sales and Net income for Constellation Brands:Click to enlarge


Brown-Forman Corp (NYSE:BF.B), Beam Inc (NYSE:BEAM), Diageo Plc (NYSE:DEO) and Molson Coors Brewing Co (NYSE:TAP) are considered as major competitors for Constellation Brands and the table below provides the key metrics for these companies:

Price $19.37 $92.99 $63.51 $99.41 $39.67
52 Week Price -8.33% 26.22% 41.45% 22.74% -11.13
Market Capitalization $3.66B $13.21B $10.01 $62.29B $7.17B
Earnings per Share 2.13 3.56 0.93 4.3 3.62
Total Revenue $2.7B $2.7B $2.3B $16.25 $3.5B
Employees (Full-Time) 4400 3010 3200 23786 15078
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Sources: Some of the data is taken from Google Finance, Nasdaq, Yahoo Finance, Finviz and investor sites.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in STZ over the next 72 hours.

Additional Disclosure: I change my positions very frequently and may initiate either long or short positions in the above mentioned stocks at any time.

Disclaimer: I am not a registered investment advisor and do not provide specific investment advice. The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. It is up to investors to make the correct decision after necessary research.