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Constellation Brands’ Revenue and Income Rose in Fiscal 3Q16

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Jan. 12 2016, Updated 4:45 p.m. ET

Price movement of Constellation Brands

After its fiscal 3Q16 earnings report, Constellation Brands (STZ) rose by 4.5% to close at $149.61 per share as of January 7, 2016.

Currently, the stock is trading 3.6% above its 20-day moving average, 5.5% above its 50-day moving average, and 16.6% above its 200-day moving average.

The PowerShares DWA Consumer Staples Momentum ETF (PSL) invests 4.2% of its holdings in Constellation Brands. The ETF tracks an index of US consumer cyclical companies selected and weighted by price momentum.

The competitors of Constellation Brands and their market capitalizations are as follows:

  • Anheuser-Busch InBev (BUD) — $189.1 billion
  • Brown-Forman (BF.B) — $19.6 billion
  • Molson Coors Brewing Company (TAP) — $16.5 billion
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Performance of Constellation Brands in fiscal 3Q16

Constellation Brands reported 3Q16 net sales of $1,640.5 million, a rise of 6.4% when compared to net sales of $1,541.7 million in fiscal 3Q15. Sales in the beer and wine and spirits segments rose by 8.2% and 4.6%, respectively, in fiscal 3Q16 compared to sales in fiscal 3Q15.

STZ’s net income, EPS (earnings per share) of Class A common stock, and EPS of Class B convertible common stock rose to $270.5 million, $1.33, and $1.22, respectively, in fiscal 3Q16, compared to $222.2 million, $1.10, and $1.01, respectively, in fiscal 3Q15.

Meanwhile, STZ’s inventories rose by 3.1% in fiscal 3Q16 compared to fiscal 4Q15. It reported cash and cash equivalents of $491.3 million in fiscal 3Q16 compared to cash and cash equivalents of $110.1 million in fiscal 4Q15. Its current and debt-to-equity ratios fell to 1.8 and 1.4, respectively, in fiscal 3Q16 compared to 2.6 and 1.6, respectively, in fiscal 4Q15.

The company has declared a quarterly cash dividend of $0.31 per share on its Class A common stock and $0.28 per share on its Class B common stock.

It has also announced the construction of a new, state-of-the-art brewery to be located in Mexicali, Mexico. The brewery will provide 10 million hectoliters of production capacity, with the ability to scale to $20 million hectoliters in the future.

Projections

For fiscal 2016, Constellation Brands has projected beer business net sales growth in the range of ~12%–14%, EPS on a comparable basis in the range of $5.30–$5.40, and free cash flow in the range of ~$475–$525 million.

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