How Constellation Brands (STZ) is Placed Ahead of Q2 Earnings

Constellation Brands, Inc. STZ is scheduled to release second-quarter fiscal 2023 results on Oct 6, 2022. The alcoholic beverage bigwig is expected to deliver top and bottom-line growth in the to-be-reported quarter.

The Zacks Consensus Estimate for the company’s fiscal second-quarter earnings is pegged at $2.83 per share, indicating 18.9% growth from the year-ago quarter’s reported figure. The consensus mark has moved up 1.1% in the past 30 days. The consensus mark for revenues is pegged at $2.5 billion, suggesting a 5.4% increase from the prior-year quarter’s reported figure.
 
In the last reported quarter, the alcohol behemoth delivered an earnings surprise of 6%. Also, its bottom line beat estimates by 4.4%, on average, over the trailing four quarters.

Constellation Brands Inc Price and EPS Surprise

 

Constellation Brands Inc Price and EPS Surprise

Constellation Brands Inc price-eps-surprise | Constellation Brands Inc Quote

Key Factors to Note

Constellation Brands is expected to have gained from continued growth in the beer business and robust consumer demand for its portfolio of premium, high-end products in the fiscal second quarter. STZ’s wine & spirits business has been benefiting from its premiumization strategy focused on making investments to fuel growth of its power brands through innovation, capitalizing on priority, consumer trends and product introductions. Strength in high-end Power Brands, including The Prisoner Brand Family, Kim Crawford and Meiomi, have been key growth drivers.

Constellation Brands has been significantly gaining from strength in the beer business. Depletion volume growth, stemming from strength in Modelo Especial and Corona Extra, has been aiding the top line. The beer segment has also been witnessing gains from premiumization, driven by growth in traditional beer as well as flavors category, including seltzers, flavored beer, RTD spirits and flavored malt beverages. These are likely to have aided the top line in the to-be-reported quarter.

However, softness in the wine & spirits business is expected to have weighed on the fiscal second-quarter performance. The company’s margins have been impacted by increased raw material, transportation, brewery and depreciation costs. Supply-chain challenges and elevated material costs due to higher commodity prices and inflationary headwinds are likely to have been deterrents in the to-be-reported quarter.

Zacks Model

Our proven model does not conclusively predict an earnings beat for Constellation Brands this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Constellation Brands has a Zacks Rank #2 and an Earnings ESP of -2.90%.

Stocks With Favorable Combination

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:

PepsiCo Inc. PEP currently has an Earnings ESP of +0.47% and a Zacks Rank of 2. The company is likely to register increases in the top and bottom lines when it reports third-quarter 2022 results. The Zacks Consensus Estimate for PEP’s quarterly earnings has been unchanged in the past 30 days at $1.84 per share. The consensus mark indicates 2.8% growth from the year-ago quarter’s reported number.

You can see the complete list of today’s Zacks #1 Rank stocks here.

PepsiCo’s top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $20.8 billion, which suggests a rise of 3.2% from the figure reported in the prior-year quarter. PEP has delivered an earnings beat of 3.8%, on average, in the trailing four quarters.

Anheuser-Busch InBev BUD, alias AB InBev, currently has an Earnings ESP of +1.22% and a Zacks Rank of 3. The company is likely to register increases in the top and bottom lines when it reports third-quarter 2022 results. The Zacks Consensus Estimate for quarterly earnings moved south by a penny in the last seven days to 82 cents per share. However, the consensus estimate indicates growth of 64% from the year-ago quarter's reported number.

AB InBev’s top line is expected to have risen year over year. The Zacks Consensus Estimate for BUD’s quarterly revenues is pegged at $15.2 billion, suggesting growth of 6.8% from the figure reported in the prior-year quarter. BUD has delivered an earnings beat of 2.4%, on average, in the trailing four quarters.

Albertsons Companies ACI currently has an Earnings ESP of +1.15% and a Zacks Rank of 3. The company is likely to register an increase in the top line when it reports second-quarter fiscal 2022 results. The Zacks Consensus Estimate for quarterly revenues is pegged at $17.6 billion, which suggests a rise of 6.6% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for quarterly earnings has been unchanged at 62 cents per share in the past 30 days. The consensus mark for ACI suggests a 3.1% decline from the year-ago quarter’s reported number. ACI has delivered an earnings beat of 25.7%, on average, in the trailing four quarters.

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