Constellation Brands Sinks Despite Solid Q3 Results

When Constellation Brands Inc. (NYSE: STZ) reported its fiscal third-quarter financial results before the markets opened on Friday, the company said that it had $2.00 in earnings per share (EPS) and $1.8 billion in revenue. That compares with consensus estimates from Thomson Reuters that called for $1.89 in EPS and revenue of $1.87 billion. The same period of last year reportedly had EPS of $1.96 and $1.81 billion in revenue.

During the quarter, the board of directors approved a new $3 billion share buyback program. This is a sizable buyback considering Constellation’s market cap is only $44 billion.

Beer sales rose 8.0% in the quarter compared to last year, while wine and spirit sales fell 10.3%. The Beer segment benefited from increased sales during the Labor Day and Thanksgiving holidays. The drop in wine and spirit sales reflected the divestiture of the company’s Canadian wine business in December 2016.

In terms of guidance, the company now expects EPS for the fiscal full year to be in the range of $8.40 to $8.50. The consensus estimates call for $8.43 in EPS and $7.64 billion in revenue for the year.

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It’s worth pointing out that during this quarter Constellation Brands invested $190 million for a minority stake in a Canadian pot company. This is the first major foray of an alcohol brand moving into the weed industry. Specifically, Constellation Brands bought a 10% stake in Canopy Growth.

Shares of Constellation Brands pulled back about 1% to $218.45 early Friday, with a consensus analyst price target of $239.47 and a 52-week trading range of $146.40 to $229.50.

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