Constellation Brands Reports Strong First-Quarter Earnings, Raises Full-Year Outlook

Key Takeaways:

• Constellation Brands beat first-quarter earnings forecasts and raised its full-year outlook on higher beer sales, but wine and spirits sales declined.
• The company’s Modelo Especial continued to be the top-selling beer brand in the U.S.
• Constellation Brands now expects full-year EPS of $14.63 to $14.93, up from its previous outlook of $13.40 to $13.70.

Constellation Brands (STZ) recently announced a significant increase in first-quarter profit and adjusted its full-year guidance due to higher beer sales. However, the company experienced a decline in wine and spirits sales during the same period.

The company reported first-quarter fiscal 2025 earnings per share (EPS) of $4.78, surpassing analysts’ consensus estimate of $3.45. This figure also represented a substantial increase from the previous year’s EPS of $0.74. Despite revenue climbing 5.8% year-over-year to $2.66 billion, it fell slightly below initial forecasts.

Modelo Especial Leads Beer Sales Higher

Beer sales saw a notable 8.3% increase, reaching $2.27 billion. This growth was primarily driven by a 7.6% rise in shipment volumes and various cost-saving initiatives implemented by Constellation Brands. Modelo Especial, one of the company’s flagship brands, continued to experience strong demand and emerged as the top-selling beer brand in the U.S. Constellation Brands highlighted that Modelo Especial generated the highest dollar sales among all beer brands in the country. Notably, Modelo Especial surpassed Bud Light, produced by Anheuser-Busch InBev (BUD), as the best-selling beer in the U.S. last year following a controversy involving AB InBev’s association with transgender influencer Dylan Mulvaney.

Chief Financial Officer (CFO) Garth Hankinson attributed the success in the beer business to consistent top-line growth and effective cost-saving measures, which resulted in robust operating income and cash flow generation.

On the flip side, wine and spirits sales experienced a decline of 6.6%, dropping to $389 million as shipment volumes decreased by 5.1%. Constellation Brands attributed this decline to challenging market conditions, particularly in the U.S. wholesale channel across various price segments within the wine category.

As a result of these developments, Constellation Brands revised its full-year EPS guidance to a range of $14.63 to $14.93, up from its previous forecast of $13.40 to $13.70.

Constellation Brands shares dipped slightly to $258.01 as of 10:40 a.m. ET on Wednesday but remained 6.7% higher year-to-date.

In conclusion, Constellation Brands’ strong performance in the beer segment, driven by the continued success of Modelo Especial, has bolstered its financial outlook for the year. While challenges persist in the wine and spirits category, the company remains optimistic about its overall prospects for fiscal 2025.

For more information on Constellation Brands’ latest earnings report and outlook, please visit Investopedia.

By incorporating strategic cost-saving measures and focusing on high-demand products like Modelo Especial, Constellation Brands has managed to navigate through challenging market conditions and deliver impressive financial results. As the company continues to adapt to evolving consumer preferences and market dynamics, investors can expect further growth and innovation from this industry leader in the beverage sector.