Advertisement
Canada markets closed
  • S&P/TSX

    22,167.03
    +59.95 (+0.27%)
     
  • S&P 500

    5,254.35
    +5.86 (+0.11%)
     
  • DOW

    39,807.37
    +47.29 (+0.12%)
     
  • CAD/USD

    0.7387
    +0.0015 (+0.20%)
     
  • CRUDE OIL

    83.11
    +1.76 (+2.16%)
     
  • Bitcoin CAD

    95,925.88
    +2,061.52 (+2.20%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • GOLD FUTURES

    2,254.80
    +16.40 (+0.73%)
     
  • RUSSELL 2000

    2,124.55
    +10.20 (+0.48%)
     
  • 10-Yr Bond

    4.2060
    +0.0100 (+0.24%)
     
  • NASDAQ futures

    18,465.00
    -38.75 (-0.21%)
     
  • VOLATILITY

    13.01
    +0.23 (+1.80%)
     
  • FTSE

    7,952.62
    +20.64 (+0.26%)
     
  • NIKKEI 225

    40,168.07
    -594.66 (-1.46%)
     
  • CAD/EUR

    0.6843
    +0.0038 (+0.56%)
     

Constellation Brands Reports Double-Digit Growth in 3Q16 Earnings

Beer Sales Help Constellation Brands Brew Strong 3Q16 Results

(Continued from Prior Part)

Fiscal 3Q16 earnings growth

Constellation Brands (STZ) reported a 15.4% growth in its adjusted EPS (earnings per share) in fiscal 3Q16 ended November 30, 2015. The company’s adjusted EPS (earnings per share) rose by 40.5% in 2Q16 and by 11.8% in 3Q15. The fiscal 3Q16 adjusted EPS, excluding the impact of non-recurring items, came in at $1.42, handily beating the consensus Wall Street analysts’ earnings estimate of $1.30. The company has now beat earnings estimates for the last five quarters.

Earnings drivers

Constellation Brands’ earnings exceeded analysts’ estimates in each of the first three quarters of fiscal 2016. The company’s 3Q16 adjusted EPS growth was driven by higher sales and improved margins. We discussed the company’s sales performance in part one of this series. The company’s strong earnings in the quarter were primarily driven by strong consumer demand for the company’s Mexican beer portfolio, lower cost of goods sold, and the improvement in the company’s Wine and Spirits segment.

ADVERTISEMENT

Constellation Brands’ 3Q16 earnings also benefited from a 12% fall in interest expense compared to the prior year quarter due to lower average interest rates. The Consumer Staples Select Sector SPDR Fund (XLP) has 2.2% exposure to Constellation Brands.

Comparison with peers

The adjusted earnings of Anheuser-Busch InBev (BUD) fell by 28.2% in the third quarter ended September 30, 2015, due to the impact of currency fluctuations. Brown-Forman (BF.B), the leading wine and spirits maker, reported adjusted EPS of $0.97 in the second quarter of fiscal 2016 ended October 31, 2015. Brown-Forman’s adjusted EPS was flat compared to the prior year’s quarter, as a 2.6% fall in net sales—after deduction of excise taxes—was offset by reduced expenses.

Molson Coors (TAP) reported a 4.1% fall in its adjusted EPS in the third quarter ended September 30, 2015, due to currency headwinds, more brand investments, and the termination of the company’s Miller brands agreement in Canada as well as the Modelo brands and Heineken brewing contracts in the United Kingdom.

Constellation Brands is ramping up its beer production capacity to be better positioned to compete with market leaders Anheuser-Busch InBev and MillerCoors. The latter is a joint venture between SABMiller (SBMRY) (SAB.L) and Molson Coors. In November 2015, Molson Coors announced that it would purchase SABMiller’s 58% stake in MillerCoors. Molson Coors currently owns 42% of MillerCoors. This transaction would be contingent on the closing of the pending acquisition of SABMiller by Anheuser-Busch InBev.

Continue to Next Part

Browse this series on Market Realist: