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Constellation Brands Stock Sinks on Fiscal Q1 2019 Earnings Miss

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Stock down on Q1 results

Constellation Brands (STZ) stock was down over 6% at 10:44 AM ET today as the company posted dismal earnings for the first quarter of fiscal 2019, which ended on May 31. Constellation Brands’ adjusted EPS of $2.20 widely missed analysts’ estimate of $2.43. The company missed analysts’ earnings expectations after 14 straight quarters of better-than-expected earnings.

Also, Constellation Brands’ adjusted EPS declined over 5% on a year-over-year basis due to increased marketing expenses, a rise in transportation costs, and currency headwinds. In particular, Constellation Brands made advance marketing investments for the introductions of the Corona Premier and Corona Familiar beer brands.

Fiscal first-quarter sales

Constellation Brands’ sales grew 6.2% on a year-to-year basis to $2.05 billion in the first quarter of fiscal 2019. The company’s sales were ahead of analysts’ expectations by just 0.2%. Sales of the company’s beer segment rose 11% to $1.4 billion. The company’s imported beer portfolio remains in demand. However, sales of the wine and spirits segment declined 2.5% to $672 million.

Fiscal 2019 outlook  

The company kept its guidance for fiscal 2019 adjusted EPS intact. It expects adjusted EPS in the $9.40–$9.70 range, compared to $8.70 in fiscal 2018. However, Constellation raised its fiscal 2019 reported EPS guidance to the range of $10.93–$11.23, compared to the previous outlook range of $9.38–$9.68.

The company continues to expect its beer segment sales as well as operating income to grow in the 9%–11% range. The sales and operating income of the wine and spirits segment are expected to rise 2%–4% in fiscal 2019.  Constellation’s strategy to focus on high-end beer as well as its premium wine and spirits portfolio is expected to boost its performance in the current fiscal year.

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