Shares of Constellation Brands (NYSE:STZ) are down almost 2% premarket Friday after the company released earnings for its latest quarter.
The company reported Q1 comparable EPS of $3.04 (excluding Canopy EIE), $0.21 better than the analyst estimate of $2.83, while revenue for the quarter came in at $2.52 billion versus the consensus estimate of $2.47B.
STZ said its beer business achieved strong double-digit net sales growth and a mid-single-digit depletion increase primarily driven by the continued momentum of the Modelo brand family.
"Our Beer Business delivered double-digit net sales growth and continued to outperform the market as the top share gainer. Meanwhile, our higher-end Wine and Spirits Business outperformed the higher-end of the U.S. wine category and gained share in that segment," commented Bill Newlands, STZ president and CEO.
Looking ahead, Constellation Brands sees its FY2024 EPS between $11.70 and $12 versus the consensus of $11.62.
Reacting to the report, RBC Capital analysts said their firm continues to believe "STZ can compound its beer top line at 7-9% rate over the next 3 years with MSD% volume growth and a more normalized pricing algorithm."
"We believe FY’24 margins also have upside, driven by productivity, operational efficiencies, mix improvements from higher end growth and believe STZ’s beer margin guide is prudent for the macro environment," said the analysts, who have an Outperform rating and $295 price target on the stock. "STZ delivered in-line beer depletions +5.5% (RBCe +6%/cons. 5.6%) which will likely disappoint some investors given the strong tracked channel trends and shares outperformance into the print. Despite the minor miss relative to our depletion estimate, we believe the underlying thesis remains in track and expect a potential positive catalyst later this year around fall shelf resets."
Meanwhile, Roth MKM analysts, who have a Buy rating and $270 price target on the stock, said STZ reported a small beat, while its guidance is beatable.
"STZ beat 1Q expectations but left FY'24 guidance unchanged. Beer depletions, at +5.5%, likely accelerated throughout 1Q and probably began 2Q >+10% (not given in release). Given the notable share shifts in scanner data, we believe STZ guidance, like that of competitors, does not include benefits from Bud Light's struggles. Following a soft March, performance needed to accelerate to meet guidance. The acceleration materialized and is large enough to suggest guidance is now the worst-case expectation," said the analysts.