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Constellation Brands: Its Strong Fiscal 2Q18 Results

PART:
1 2 3 4 5 6 7
Part 2
Constellation Brands: Its Strong Fiscal 2Q18 Results PART 2 OF 7

How Constellation Brands’ 2Q18 Earnings Beat Analysts’ Estimates

Earnings beat estimates

Constellation Brands (STZ) delivered adjusted EPS (earnings per share) of $2.47 in fiscal 2Q18, which ended on August 31, 2017. The beer, wine, and spirits producer handily exceeded the consensus Wall Street analysts’ earnings estimate of $2.16 per share. The company has consistently exceeded analysts’ earnings expectations in all the quarters of fiscal 2016 and fiscal 2017 as well as the first two quarters of fiscal 2018.

How Constellation Brands’ 2Q18 Earnings Beat Analysts’ Estimates

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Strong YoY growth

Constellation Brands’ adjusted EPS rose an impressive 40.0% on a year-over-year basis in fiscal 2Q18. That growth was a result of higher sales and operating margin expansion. We’ll look at the company’s fiscal 2Q18 margins in Part 5 of this series.

Constellation Brands’ earnings in fiscal 2Q18 also rose due to lower interest expense. Its interest expense fell 14.0% in the quarter due to lower average interest rates. Its earnings also benefitted from a lower effective tax rate. Its adjusted effective tax rate was 20.5% in fiscal 2Q18 compared to 31.8% in fiscal 2Q17. The lower rate resulted from reinvesting foreign earnings under APB 23 and the adoption of accounting standard ASU 2016-09, which is associated with excess tax benefits from stock-based payments.

Molson Coors Brewing’s (TAP) adjusted EPS rose 3.1% on a year-over-year basis to $1.66 in 2Q17. The growth was a result of a rise in brand volume, higher pricing, favorable sales mix, cost savings, and lower marketing spending.

Guidance raised

The strong performance by Constellation Brands’ beer business helped the company raise its earnings guidance for fiscal 2018. It now expects adjusted EPS of $8.25–$8.40 compared to the previous outlook of $7.90–$8.10.

Next, let’s look at the company’s 2Q18 sales performance.

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