Constellation Brands: Falling Star? - TheStreet

NEW YORK (

TheStreet

) -- Leading credit researcher CreditSights says that

Constellation Brands'

(STZ) - Get Report

lower quarterly announcement isn't necessarily indicative of a major deterioration in its business.

Rather, the poorer results were mainly a function of the timing of inventory build at distributors, CreditSights writes in a research report.

CreditSights says that looking at its year-to-date performance, Constellation Brands' organic sales are roughly flat. Furthermore, the company's operating and adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) margin improved on a year-to-date basis.

"We believe its liquidity is adequate and the company should be able to cover short-term maturities of roughly $480 million with free cash flow," CreditSights writes.

On another positive note for Constellation, a leading producer of premium wines, CreditSights says that the premium segment of the wine market reflected high single-digit growth on a dollar basis for the most recent 12-week period.

Constellation Brands yesterday announced earnings of about $44.1 million, or 20 cents a share for its fiscal third quarter ended Nov. 30, down from $83.5 million, or 38 cents a share, in same quarter a year ago.

A Thomson Reuters poll of analysts had arrived at an earnings estimate of 52 cents per share.

"U.S. branded wine net sales were impacted by continuing economic challenges, higher levels of promotional spending in advance of the holiday selling season and the expected shift of sales to the second quarter from the third quarter as part of our U.S. distributor network consolidation activities," said Rob Sands, president and CEO, Constellation Brands.

Constellation stock has fallen 2.1% to $15.60, while beverage alcohol company

Diageo

(DEO) - Get Report

has slipped 0.2% to $68.30.

Brown-Forman

(BF.B)

has slipped 0.5% to $53.20 and

Central European Distribution

( CEDC) stock has fallen 1.5% to $30.60.

-- Reported by Andrea Tse in New York

>>See our new stock quote page.

Follow TheStreet.com on

Twitter

and become a fan on

Facebook.

Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.