Constellation Brands Hammered
Constellation Brands
(STZ) - Get Report
was stumbling around Wednesday morning after the wine purveyor said dilution from a recent stock sale will sink 2005 earnings.
Fairport, N.Y.-based Constellation expects to earn $2.43 to $2.53 a share in the year that starts next month, including a 12-cent charge related to restructuring and unusual costs. Earnings before the items of $2.55 to $2.65 will be somewhat short of the $2.74 a share forecast by analysts.
In July 2003 Constellation sold 9.5 million common shares at $28 apiece to help pay off outstanding bridge loans used in the $1.3 billion acquisition of Australian winemaker BRL Hardy in early 2003. On Tuesday night, the company said dilution from that deal is to blame for the below-trend growth, along with higher "brand investment" in its imported beer and branded wine portfolios.
The shares responded to the disappointment, recently falling $2.93, or 8.7%, to $30.83 in premarket trading. That's about 11.6 times the high end of the 2005 operating guidance.
Constellation backed 2004 estimates in Tuesday night's release.