NEW YORK (TheStreet) -- Global alcoholic beverage giant Constellation Brands (STZ) - Get Report, known for products like Corona, Robert Mondavi wines and Svedka Vodka will report first-quarter fiscal 2016 earnings results Wednesday before the opening bell.
For the quarter that ended in May, Constellation Brands is projected to earn $1.23 a share on revenue of $1.6 billion, translating to increases of 15% and 6%, respectively. For the full year ending in February, earnings are projected to grow 10% to $4.88 a share, while revenue of $6.37 billion calls for growth of almost 6%.
That both quarter and full-year earnings are projected to grow at or almost twice the rate of revenue underscores the focus management has placed on its profit margins and retuning value to shareholders. And this would explain why shares of the Victor, New York-based company are already up some 20% in 2015, against 1% gains for the S&P 500 index.
So, while taking profits ahead of Wednesday's results would ordinarily seem like a smart move, in this case, it would be huge mistake.
This is a "cash machine that continues to execute well," said TheStreet's Jim Cramer in April. "Investors who sell the stock near current levels are going to wish they hadn't done so," he added.
Cramer was right. When he made those comments two months ago, the stock was up less than 1% on the year. But as he then also noted, Constellation Brands was already ahead of its peers in terms of revenue, suggesting the stock wouldn't stay depressed for long. And that's exactly the same position the company is in today.
Constellation Brands shares have since lapped the 7% gains in the PowerShares Dynamic Food & Beverage ETF (PBJ) - Get Report -- home to prominent consumer staples producers like PepsiCo (PEP) - Get Report and Kraft Foods (KRFT) . The stock reached a new lifetime-high last week of $122.13.
With a P/E of 27 times earnings compared to an average P/E of 21 for S&P 500 stocks, its shares might appear too bubbly. But the company is one quarter removed from delivering profits that jumped almost 40%. Better still, Constellation Brands continues to show improvement in every important metric, including gross margin, which expanded 118 basis points last quarter, reaching 43.75% of sales.
Moreover, revenue from its beer portfolio, which includes Modelo Especial, Negra Modelo and Corona Extra, climbed 11% year over year to $661 million. The company is benefiting from strong volume growth and higher-than-expected consumer demand. And if recent trends serves as indication, Constellation Brands has only just begun to pour higher profits.
Buoyed by the growing popularity of whiskeys like bourbon and Tennessee whiskey in the United States as well as abroad, whiskey sales are still on the rise, according to the Distilled Spirits Council of the United States. The value of imported whiskey in the United States has climbed by an average of more than 10% annually in the last three years.
In the first quarter of 2015 alone, whiskey imports climbed 15.2% year over year, reaching some $395 million. Not only does this bode well for Constellation Brands' premium whiskey brand, Black Velvet, it also increases the odds of the company extending its streak of quarterly earnings beats to three on Wednesday.
Constellation Brands shares were trading early Monday afternoon at around $116, but the stock could easily approach $130 to $135 in the next 12 to 18 months, based both on the company's new status as a dividend payer, and more importantly, its ability to grow margins and deliver higher profits.
This article is commentary by an independent contributor. At the time of publication, the author held no shares in any of the stocks mentioned.