Preview: What to Expect From Beer Giant Constellation Brands’ Earnings on Wednesday

The New York-based Fortune 500 international beverage alcohol company Constellation Brands is expected to report its fiscal second-quarter earnings of $2.78 per share, which represents year-over-year growth of about 1% from $2.76 per share seen in the same quarter a year ago.

The corona beer marker’s revenue is predicted to rise nearly 4% to around $2.34 billion.

According to ZACKS Research, earnings guidance from Constellation Brands for fiscal 2022 has been updated. For the beer segment, the company continues to expect net sales growth of 7-9%. Earnings are expected to increase by 3-5% for the beer division.

According to estimates, sales of wine and spirits will decrease by 22-24% and by 23-25%, respectively. Organic sales are expected to increase by 2-4% in the wine and spirits segment, ZACKS research added.

Analyst Comments

“We rate Constellation Brands (STZ) Overweight. Valuation in our minds does not reflect STZ’s strong LT topline growth outlook with the beer segment returning to HSD% depletion growth in FY22 and beyond, an improved wine/spirits outlook post the low-end divestiture, and a return to share repurchases,” noted Dara Mohsenian, equity analyst at Morgan Stanley.

“Robust Beer Depletion Growth: We expect a re-acceleration to +HSD% beer depletions growth in FY22 and beyond post negative COVID impacts in FY21. Our expected improvement is driven by the resolution of beer out-of-stocks, improving shelf-space and market share trends for STZ high-velocity products, as well as distribution expansion. Solid Long-Term Beer Fundamentals: Our robust +HSD% LT beer topline CAGR is driven by favourable sub-category positioning (high-end beer), advantageous demographics (skew to Hispanics), solid pricing, and innovation. Our ~7.7% 3-year STZ corporate organic sales forecast is above the ~4% growth at higher valued beverage peers.”

Constellation Brands Stock Price Forecast

Six analysts who offered stock ratings for Constellation Brands in the last three months forecast the average price in 12 months of $268.33 with a high forecast of $300.00 and a low forecast of $234.00.

The average price target represents a 25.69% change from the last price of $213.48. From those six analysts, five rated “Buy”, one rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $266 with a high of $310 under a bull scenario and $147 under the worst-case scenario. The firm gave an “Overweight” rating on the alcohol company’s stock.

Several other analysts have also updated their stock outlook. Deutsche Bank slashed the target price to $234 from $242. Evercore ISI cut the target price to $275 from $280. Barclays lowered the target price to $260 from $266. Jefferies cut the target price to $300 from $305.

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