Constellation Brands Earnings Call Insights
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 6 days ago
0mins
Source: Yahoo Finance
- Brand Portfolio Strength: Constellation Brands boasts a strong portfolio with brands like Modelo, Corona, and Pacifico, which have deep consumer connections and enduring relevance, likely continuing to drive sales growth.
- Non-Alcoholic Market Potential: The Corona non-alcoholic segment is experiencing strong double-digit growth, indicating significant growth potential in the non-alcoholic space, which could open new revenue streams for the company.
- Cost Leverage Effect: The company achieved a 39% gross margin in its beer segment, benefiting from effective fixed cost leverage and cost-saving measures, although increased marketing spend may impact operating margins in the future.
- Market Environment Challenges: Despite strong initial quarterly performance, Constellation Brands faces cautious guidance due to economic uncertainty and fluctuations in consumer spending, particularly within the Hispanic consumer segment.
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Analyst Views on STZ
Wall Street analysts forecast STZ stock price to rise
15 Analyst Rating
7 Buy
7 Hold
1 Sell
Moderate Buy
Current: 131.760
Low
135.00
Averages
163.00
High
209.00
Current: 131.760
Low
135.00
Averages
163.00
High
209.00
About STZ
Constellation Brands, Inc. is a producer and marketer of beer, wine, and spirits with operations in the United States, Mexico, New Zealand, and Italy with brands, such as Corona Extra, Modelo Especial, Robert Mondavi Winery, Kim Crawford, The Prisoner Wine Company, High West, Casa Noble, and Mi CAMPO. Its segments include Beer, Wine and Spirits, and Corporate Operations and Other. In the Beer segment, its portfolio consists of high-end imported beer brands and ABAs. It has a perpetual brand license to produce its Mexican beer portfolio and to import, market, and sell such a portfolio in the United States. In the Wine and Spirits segment, it sells a portfolio that includes higher-end wine brands complemented by certain higher-end spirits brands. Its Corporate Operations and Other segment consists of costs of corporate development, corporate finance, corporate strategy, executive management, growth, human resources, internal audit, investor relations, IT, legal and public relations.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Stock Recommendations: Cramer specifically points to PepsiCo, suggesting that its recent pullback offers a favorable entry point ahead of its July 9 earnings report, while he also sees potential in Starbucks as its CEO works on a successful turnaround.
- Risky Investment Opportunities: For investors willing to take on more risk, Cramer emphasizes Constellation Brands, noting that despite ongoing concerns about spirits, its beer business appears to be stabilizing, making it worth a look.
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- Stock Recommendations: Cramer specifically mentioned Johnson & Johnson, PepsiCo, Starbucks, Constellation Brands, and TJX as stocks that are undervalued amid market fluctuations, making them worthy of investor attention.
- Market Dynamics: Following last week's jobs report indicating a slowdown in hiring, many large money managers repositioned their portfolios, leading to a drop in high-quality stock prices, which Cramer believes creates a favorable buying environment.
- Sector Impact: Cramer emphasized that discount retailers like TJX may benefit from weakened consumer spending, as excess inventory at traditional retailers provides them with more discounted merchandise, enhancing their competitive edge in the market.
See More
World Cup Eliminations Impact Beer Demand
- Market Expectations Decline: The early eliminations of Brazil and Mexico from the World Cup are expected to negatively impact beer demand for Anheuser-Busch InBev (BUD), Constellation Brands (STZ), and Heineken (HEINY), as historical data shows significant beer volume increases when teams make deep tournament runs.
- Sales Growth Data: According to Morgan Stanley's research, beer volume growth is estimated at 80 basis points during quarter-finals, 150 basis points for semi-finals, and 215 basis points for finals, highlighting the substantial impact of Brazil's early exit on the market.
- U.S. Market Focus: With the U.S. matchup against Belgium becoming a key focus, Morgan Stanley analysts note that despite the shorter football history, continued progress by the U.S. team could yield unexpected positive effects on the U.S. beer market, particularly given the host-nation context.
- Stock Market Reaction: Shares of Anheuser-Busch InBev, Constellation Brands, and Heineken all fell on Monday, reflecting market concerns over the impact of World Cup eliminations on beer sales, especially in light of declining expectations in the Brazilian market.
See More
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