Did Constellation Brands Beat Estimates for Fiscal 4Q16 Earnings?



Constellation Brands beat 4Q16 earnings estimates

Constellation Brands (STZ) impressed its investors by delivering strong results in the fourth quarter of fiscal 2016, which ended February 29, 2016. The company reported adjusted EPS (earnings per share) of $1.19, beating Wall Street analysts’ consensus estimate of $1.14. Constellation Brands also exceeded analysts’ earnings estimates in the first three quarters of fiscal 2016.

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Earnings growth drivers

Constellation Brands’ adjusted EPS in fiscal 4Q16 rose 15.5% to $1.19, primarily driven by higher sales. We’ll discuss the company’s fiscal 4Q16 sales in the next part of this series. Constellation Brands’ earnings in 4Q16 also increased due to higher margins, as discussed in the fourth part of this series. The company’s margins are benefiting from its “premiumization” strategy, which involves focusing on high-margin, high-growth premium beer and wine products.

In fiscal 2016, the company’s adjusted EPS rose 22.2% to $5.43 compared to the prior fiscal year, driven by strong sales and enhanced margins. Constellation Brands constitutes 5.2% of the PowerShares Dynamic Food & Beverage Portfolio (PBJ).

Anheuser-Busch InBev (BUD), the largest beer company, reported 1.6% growth in its adjusted EPS in its fiscal 4Q15, which ended December 31, 2015. The adjusted EPS of Molson Coors Brewing Company (TAP) for its comparable fourth quarter fell 10.9% due to currency headwinds, higher marketing costs, and termination of certain business contracts. Brown-Forman’s (BF.B) adjusted EPS in its fiscal 3Q16, which ended January 31, 2016, rose 8% to $0.94. This growth was mainly driven by higher margins.

Potential IPO for Canadian wine business

Constellation Brands also disclosed that it is evaluating an IPO (initial public offering) for a portion of its Canadian wine business. The company stated that its Canadian business performed well in fiscal 2016. The company believes that an IPO will help to create better visibility for its Canadian business and to realize its full value. The company expects to reach a final decision on this matter by the end of 2016.


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