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STZ Q2 Earnings: Will Soft Wine & Spirits Trends to Mar Results?
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Constellation Brands, Inc. (STZ - Free Report) is scheduled to release second-quarter fiscal 2025 results on Oct. 3, 2024. The alcoholic beverage bigwig is expected to have recorded top-and-bottom-line growth in the to-be-reported quarter.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
The Zacks Consensus Estimate for the company’s fiscal second-quarter earnings is pegged at $4.11 per share, indicating 11.1% growth from the year-ago quarter’s reported figure. The consensus mark has moved down by a penny in the past 30 days. The consensus mark for revenues is pegged at $3 billion, suggesting a 4% increase from the prior-year quarter’s reported figure.
In the last reported quarter, the alcohol behemoth delivered an earnings surprise of 3.2%. Its bottom line beat estimates by 6.4%, on average, over the trailing four quarters.
Constellation Brands has been facing challenges in its wine & spirits segment, primarily due to tough market conditions across most price ranges. The company has also been dealing with increased corporate expenses, driven by higher compensation and benefits costs and elevated professional fees. In the last earnings call, management projected a slight rise in these expenses in the coming quarters, largely due to higher compensation and investments in digital capabilities.
Constellation Brands also expects a modest increase in interest expenses following reduced capitalized interest from its beer business expansion in the fiscal second quarter. It anticipates a minor uptick in the effective tax rate, partly due to greater contributions from the wine and spirits segment to overall operating income.
In a recent update, the company noted that soft demand trends in its wine and spirits business persisted into the fiscal second quarter, particularly in the U.S. wholesale market, leading to declines in both mainstream and premium wine brands. Macroeconomic factors, such as rising unemployment, have weakened consumer demand.
As a result, STZ expects to incur non-cash goodwill impairment charges of $1.5-$2.5 billion in its wine and spirits division in second-quarter fiscal 2025. Despite efforts in pricing and marketing to support core brands, the company faces operating challenges, further contributing to these impairment charges.
While the previously implemented commercial and operational initiatives have improved the performance of major brands in the wine and spirits category, additional category headwinds are affecting the near-term outlook of this segment. These pressures, combined with ongoing macroeconomic challenges, have been posing risks for this segment and are expected to result in weaker top-and-bottom-line results in the to-be-reported quarter.
However, the beer segment remains resilient, with minimal impact from broader economic conditions. Constellation Brands’ beer division is expected to have benefited from cost-saving measures and efficiency initiatives, though increased marketing investments may slightly offset these gains. This is expected to be reflected in the beer segment’s operating income in the to-be-reported quarter.
The company is poised for continued growth in its beer portfolio, driven by brands like Modelo Especial, Corona Extra, Pacifico, and Modelo Chelada. The beer segment’s premiumization strategy, including flavored beers and seltzers, is expected to have boosted the top line in the fiscal second quarter.
Zacks Model
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 odds of an earnings beat. But that is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Constellation Brands has a Zacks Rank #3 and an Earnings ESP of -0.30%.
Stocks With Favorable Combination
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
Philip Morris International (PM - Free Report) currently has an Earnings ESP of +0.57% and a Zacks Rank of 2. The company is expected to register top-and-bottom-line growth when it reports third-quarter 2024 results. The Zacks Consensus Estimate for Philip Morris’ quarterly revenues is pegged at $9.6 million, which suggests growth of 4.7% from the figure reported in the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for PM’s quarterly earnings has been unchanged in the past 30 days at $1.83 per share. The consensus mark indicates 9.6% growth from the year-ago quarter’s reported number. PM delivered an earnings beat of 1.8%, on average, in the trailing four quarters.
Colgate-Palmolive (CL - Free Report) currently has an Earnings ESP of +1.20% and a Zacks Rank #2. The company is expected to register top-and-bottom-line growth when it reports third-quarter 2024 results. The Zacks Consensus Estimate for quarterly revenues is pegged at $5 billion, which suggests a rise of 1.9% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for quarterly earnings has remained unchanged at 88 cents per share in the past 30 days. The consensus mark for CL’s earnings indicates growth of 2.3% from the year-ago quarter’s reported number. CL has delivered an earnings surprise of 4.8%, on average, in the trailing four quarters.
Monster Beverage (MNST - Free Report) currently has an Earnings ESP of +1.62% and a Zacks Rank of 3. The company is expected to register top-and-bottom-line growth when it reports third-quarter 2024 results. The Zacks Consensus Estimate for MNST’s quarterly earnings has remained unchanged in the last 30 days at 43 cents per share. The consensus estimate for earnings indicates 4.9% growth from the year-ago quarter's reported number.
The Zacks Consensus Estimate for Monster Beverage’s quarterly revenues is pegged at $1.9 billion, suggesting a rise of 3.2% from the figure reported in the prior-year quarter. MNST has delivered a negative earnings surprise of 3.4%, on average, in the trailing four quarters.
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STZ Q2 Earnings: Will Soft Wine & Spirits Trends to Mar Results?
Constellation Brands, Inc. (STZ - Free Report) is scheduled to release second-quarter fiscal 2025 results on Oct. 3, 2024. The alcoholic beverage bigwig is expected to have recorded top-and-bottom-line growth in the to-be-reported quarter.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
The Zacks Consensus Estimate for the company’s fiscal second-quarter earnings is pegged at $4.11 per share, indicating 11.1% growth from the year-ago quarter’s reported figure. The consensus mark has moved down by a penny in the past 30 days. The consensus mark for revenues is pegged at $3 billion, suggesting a 4% increase from the prior-year quarter’s reported figure.
In the last reported quarter, the alcohol behemoth delivered an earnings surprise of 3.2%. Its bottom line beat estimates by 6.4%, on average, over the trailing four quarters.
Constellation Brands Inc Price and EPS Surprise
Constellation Brands Inc price-eps-surprise | Constellation Brands Inc Quote
Key Factors to Note
Constellation Brands has been facing challenges in its wine & spirits segment, primarily due to tough market conditions across most price ranges. The company has also been dealing with increased corporate expenses, driven by higher compensation and benefits costs and elevated professional fees. In the last earnings call, management projected a slight rise in these expenses in the coming quarters, largely due to higher compensation and investments in digital capabilities.
Constellation Brands also expects a modest increase in interest expenses following reduced capitalized interest from its beer business expansion in the fiscal second quarter. It anticipates a minor uptick in the effective tax rate, partly due to greater contributions from the wine and spirits segment to overall operating income.
In a recent update, the company noted that soft demand trends in its wine and spirits business persisted into the fiscal second quarter, particularly in the U.S. wholesale market, leading to declines in both mainstream and premium wine brands. Macroeconomic factors, such as rising unemployment, have weakened consumer demand.
As a result, STZ expects to incur non-cash goodwill impairment charges of $1.5-$2.5 billion in its wine and spirits division in second-quarter fiscal 2025. Despite efforts in pricing and marketing to support core brands, the company faces operating challenges, further contributing to these impairment charges.
While the previously implemented commercial and operational initiatives have improved the performance of major brands in the wine and spirits category, additional category headwinds are affecting the near-term outlook of this segment. These pressures, combined with ongoing macroeconomic challenges, have been posing risks for this segment and are expected to result in weaker top-and-bottom-line results in the to-be-reported quarter.
However, the beer segment remains resilient, with minimal impact from broader economic conditions. Constellation Brands’ beer division is expected to have benefited from cost-saving measures and efficiency initiatives, though increased marketing investments may slightly offset these gains. This is expected to be reflected in the beer segment’s operating income in the to-be-reported quarter.
The company is poised for continued growth in its beer portfolio, driven by brands like Modelo Especial, Corona Extra, Pacifico, and Modelo Chelada. The beer segment’s premiumization strategy, including flavored beers and seltzers, is expected to have boosted the top line in the fiscal second quarter.
Zacks Model
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 odds of an earnings beat. But that is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Constellation Brands has a Zacks Rank #3 and an Earnings ESP of -0.30%.
Stocks With Favorable Combination
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
Philip Morris International (PM - Free Report) currently has an Earnings ESP of +0.57% and a Zacks Rank of 2. The company is expected to register top-and-bottom-line growth when it reports third-quarter 2024 results. The Zacks Consensus Estimate for Philip Morris’ quarterly revenues is pegged at $9.6 million, which suggests growth of 4.7% from the figure reported in the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for PM’s quarterly earnings has been unchanged in the past 30 days at $1.83 per share. The consensus mark indicates 9.6% growth from the year-ago quarter’s reported number. PM delivered an earnings beat of 1.8%, on average, in the trailing four quarters.
Colgate-Palmolive (CL - Free Report) currently has an Earnings ESP of +1.20% and a Zacks Rank #2. The company is expected to register top-and-bottom-line growth when it reports third-quarter 2024 results. The Zacks Consensus Estimate for quarterly revenues is pegged at $5 billion, which suggests a rise of 1.9% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for quarterly earnings has remained unchanged at 88 cents per share in the past 30 days. The consensus mark for CL’s earnings indicates growth of 2.3% from the year-ago quarter’s reported number. CL has delivered an earnings surprise of 4.8%, on average, in the trailing four quarters.
Monster Beverage (MNST - Free Report) currently has an Earnings ESP of +1.62% and a Zacks Rank of 3. The company is expected to register top-and-bottom-line growth when it reports third-quarter 2024 results. The Zacks Consensus Estimate for MNST’s quarterly earnings has remained unchanged in the last 30 days at 43 cents per share. The consensus estimate for earnings indicates 4.9% growth from the year-ago quarter's reported number.
The Zacks Consensus Estimate for Monster Beverage’s quarterly revenues is pegged at $1.9 billion, suggesting a rise of 3.2% from the figure reported in the prior-year quarter. MNST has delivered a negative earnings surprise of 3.4%, on average, in the trailing four quarters.