What to Expect When Constellation Brands (STZ) Reports Earnings Wednesday

NEW YORK (TheStreet) -- Shares of Constellation Brands (STZ) were up 0.71% to $116.42 in afternoon trading Tuesday, one day ahead of the alcoholic beverage company's first quarter earnings report, due out before the opening bell tomorrow.

The company is expected to earn $1.23 per share on revenue of $1.62 billion for the quarter ended in May.

In the same quarter of last year, Constellation Brands earned $1.07 per share on sales of $1.53 billion. 

TheStreet's Jim Cramer, Portfolio Manager of the Action Alerts PLUS Charitable Trust Portfolio says he's watching numbers from the seller of Corona and Modelo, its two fastest growing brands in the U.S. 

Victor, N.Y.-based Constellation Brands is an international beverage alcohol company operating segments including beer, wine and spirits.

The company's customers include wholesale distributors, retailers, on premise locations and government alcohol beverage control agencies.

Domestically, Constellation Brands operates 19 wineries using varieties of grapes grown in the Napa, Sonoma, Monterey and San Joaquin regions of California. It also operates eight wineries in Canada, four wineries in New Zealand and five wineries in Italy.

Separately, TheStreet Ratings team rates CONSTELLATION BRANDS as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate CONSTELLATION BRANDS (STZ) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, good cash flow from operations, expanding profit margins and solid stock price performance. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 5.2%. Since the same quarter one year prior, revenues slightly increased by 5.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Beverages industry average. The net income increased by 36.5% when compared to the same quarter one year prior, rising from $157.20 million to $214.60 million.
  • Net operating cash flow has significantly increased by 67.88% to $330.90 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 29.47%.
  • 47.96% is the gross profit margin for CONSTELLATION BRANDS which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 15.82% trails the industry average.
  • Powered by its strong earnings growth of 34.17% and other important driving factors, this stock has surged by 32.88% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • You can view the full analysis from the report here: STZ Ratings Report

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