Constellation Brands, Inc. STZ is scheduled to release second-quarter fiscal 2021 results on Oct 1, 2020. In the last reported quarter, the alcohol behemoth delivered an earnings surprise of 13.3%. Moreover, its bottom line beat estimates by 15.2%, on average, over the trailing four quarters.
The Zacks Consensus Estimate for the company’s fiscal second-quarter earnings stands at $2.50, indicating an 8.1% decline from the year-ago quarter’s reported figure. Further, the consensus mark has moved up by a penny in the past seven days. Nonetheless, the consensus mark for revenues is pegged at $2,195 million, suggesting a 6.4% decline from the prior-year quarter’s reported figure.
Key Factors to Note
Despite the impacts of the coronavirus outbreak, Constellation Brands has been gaining from robust depletions and strength in the off-premise channel. In the last reported quarter, depletion volume for the beer business benefited from robust off-premise channel sales growth of nearly 20%, which more than offset the 75% decline in the on-premise channel due to the coronavirus outbreak-related closures. Continuation of these trends in the off-premise business is expected to have aided depletions and the top line in the fiscal second quarter.
Moreover, continued strength in the Modelo and Corona brand families, and constant innovation have been driving portfolio depletions and market share gains. Moreover, the company’s wine & spirits premiumization strategy has been yielding results, as evident from the recent acceleration in depletions for the power brands, namely Kim Crawford, Meiomi and The Prisoner Brand Family.
Moreover, Constellation Brands’ constant focus on brand building and initiatives to include new products bode well. The company is anticipated to have benefited from growth in the hard seltzer category as it recently launched the Corona hard seltzer. Also, its fiscal second-quarter results are expected to reflect gains from consumers’ shift to e-commerce for buying alcoholic beverages. The digital business has been gaining share through platforms like Instacart, Drizly and other retailer online sites as consumers look for the convenience offered by these channels, which should bolster the results for the to-be-reported quarter.
However, lower shipments in the beer, and wine & spirits segments due to a decline in on-premise demand as bars and restaurants remain closed have been weighing on the top line. Notably, reduced production levels at its breweries in Mexico have been negatively impacting beer shipment volume. Further, the widened gap between production levels and robust consumer demand has been resulting in lower-than-normal distributor inventory on hand.
In the last reported quarter, management predicted the slowed beer production in Mexico due to the COVID-19 outbreak to continue hurting shipments and distribution inventory levels in the fiscal second quarter.
Our proven model does not conclusively predict an earnings beat for Constellation Brands this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. 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 #3 and an Earnings ESP of -1.37%.
Stocks Poised to Beat Earnings Estimates
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to deliver an earnings beat:
Deckers Outdoor Corporation DECK has an Earnings ESP of +5.43% and it sports a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Whirlpool Corporation WHR currently has an Earnings ESP of +9.25% and a Zacks Rank #2.
KimberlyClark Corporation KMB presently has an Earnings ESP of +2.65% and a Zacks Rank #2.
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