Constellation Brands, Inc. (NYSE:STZ) is set to announce its third-quarter fiscal 2024 results on January 5, 2024. The major alcoholic beverage company is poised for growth in both top and bottom lines for the upcoming quarter.
The Consensus Estimate for Constellation Brands’ fiscal Q3 earnings stands at $3.04 per share, indicating a 7.4% increase from the reported figure in the same quarter last year. This consensus mark has seen a one-cent uptick in the past seven days. Revenue estimates for the quarter are pegged at $2.55 billion, projecting a 4.7% rise from the prior-year quarter.
In the previous quarter, the company surprised the market with a 9.5% earnings beat, consistently exceeding estimates by an average of 4.3% over the trailing four quarters.
Key Factors to Consider
Constellation Brands has experienced positive momentum driven by the strength of its beer portfolio, particularly the solid performances of Modelo Especial, Modelo Chelada brands, Corona Extra, Pacifico, and Modelo Oro. The company’s premiumization strategy has been successful, evident in the accelerated growth of Power Brands.
The third quarter of fiscal 2024 is anticipated to benefit from continued growth in the beer business and strong consumer demand for the company’s premium, high-end products. The beer segment has witnessed gains from premiumization, fueled by growth in traditional beer and the flavor category, including seltzers, flavored beer, RTD spirits, and flavored malt beverages.
STZ’s wine & spirits business has been thriving due to its premiumization strategy, which focuses on investments to drive the growth of its Power Brands through innovation, aligning with consumer trends, and introducing new products. The strength in high-end Power Brands, including The Prisoner Brand Family, Kim Crawford, and Meiomi, remains a key growth driver.
The Consensus Estimate for fiscal Q3 sales is $2,002 million for the Beer business and $552 million for the wine & spirits business.
However, Constellation Brands’ margins have been impacted by ongoing inflation, leading to higher packaging and raw material costs. These factors are expected to persist in the fiscal third quarter. Increased depreciation and operating costs from brewery capacity expansions have also acted as headwinds. Higher overhead costs related to brewery expansion and increased logistics costs associated with higher shipment volumes are likely to have a margin-dampening effect.
Featured Image: Freepik @ Racool_studio
Author Stephanie Bédard-Châteauneuf 
