Constellation Brands‘ earnings beat Wall Street’s expectations as the company reported strong beer sales for the latest quarter on Friday. The stock fell anyway.
The company, which sells market-leading Mexican beer Modelo Especial, reported comparable adjusted earnings of $2.91 per share for its fiscal first quarter, which ended May. This included losses from its cannabis business,
The consensus call among analysts tracked by FactSet was that earnings would be $2.83 a share.
Constellation Brands (STZ) said beer sales grew 11% to $2.1 billion from the prior year due to a 7.5% increase in shipments as Modelo Especial became the No. 1 brand in the U.S. beer category. It displaced Anheuser-Busch’s Bud Light, which has suffered a backlash after the brand partnered with transgender social media influencer Dylan Mulvaney.
Beer sales were the highest since the quarter that ended in August 2022.
Still, growth in depletions, or shipments of beer to retailers from distributors, came in a touch lower than expected at 5.5% compared with the 5.6% analysts expected.
Shares of Constellation dropped 1.6% in premarket trading Thursday to $242.90. Coming into Thursday trading, the stock had gained 6.5% this year.
RBC analyst Nik Modi reiterated an Outperform call on the stock. “We believe the underlying thesis remains in track,” despite a minor shortfall relative to the firm’s expectations for growth in shipments, Modi wrote in a research note. RBC had estimated shipments grew 6%.
Constellation expects fiscal 2024 earnings of between $11.70 and $12 per share, excluding Canopy’s contribution, which matches management’s prior forecast and is slightly ahead of the $11.67 per share estimated by analysts.
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