Can Constellation Brands Beat Q1 Earnings Amid High Costs?

Constellation Brands, Inc. STZ is scheduled to release first-quarter fiscal 2025 results on Jul 3, 2024. The alcoholic beverage bigwig is expected to have recorded top and bottom-line growth in the to-be-reported quarter.
The Zacks Consensus Estimate for the company's fiscal first-quarter earnings is pegged at $3.46 per share, indicating 18.9% growth from the year-ago quarter's reported figure. The consensus mark has moved down 0.6% in the past 30 days. The consensus mark for revenues is pegged at $2.7 billion, suggesting a 6.3% increase from the prior-year quarter's reported figure.
In the last reported quarter, the alcohol behemoth delivered an earnings surprise of 7.6%. Its bottom line beat estimates by 6.3%, on average, over the trailing four quarters.

Constellation Brands Inc Price and EPS Surprise

Constellation Brands Inc price-eps-surprise | Constellation Brands Inc Quote

Key Factors to Note

Constellation Brands' solid brand portfolio and continued efforts to lift the brands through its premiumization efforts have been aiding its performance for several quarters. Strength in its beer portfolio, with continued growth of Modelo Especial and Corona Extra and newer brands — Pacifico and the Modelo Chelada, has been bolstering its top line.
The company's premiumization strategy has been playing out well, as evidenced by accelerated growth of Power Brands. The company's high-end Power Brands, including The Prisoner Brand Family, Kim Crawford and Meiomi, within the Wine & Spirits segment, have been the key growth drivers.
The beer segment has also been witnessing premiumization gains, with growth in traditional beer and the flavor category, including seltzers, flavored beer, RTD spirits and flavored malt beverages. These are likely to have aided the top line in the to-be-reported quarter.
Constellation Brands' first-quarter fiscal 2025 results are expected to reflect robust consumer demand for its premium, high-end products portfolio, and sustained growth for its beer brands.
However, STZ has been witnessing elevated raw material, packaging and logistic costs for a while now due to the ongoing inflationary environment. The company is expected to have incurred higher packaging and raw material costs, impacting margins in the fiscal first quarter. Additionally, STZ's profit margins are expected to reflect the impacts of higher overhead costs related to its brewery expansion and increased logistics costs due to higher shipment volumes.

Zacks Model

Our proven model does not conclusively predict an earnings beat for Constellation Brands this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here.
Constellation Brands has a Zacks Rank #3 and an Earnings ESP of -0.06%.

Stocks With Favorable Combination

Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
Philip Morris International PM currently has an Earnings ESP of +1.42% and a Zacks Rank of 3. The company is likely to register top-line growth when it reports second-quarter 2024 results. The Zacks Consensus Estimate for Philip Morris' quarterly revenues is pegged at $9.1 million, which suggests growth of 1.8% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for PM's quarterly earnings has been unchanged in the past 30 days at $1.55 per share. The consensus mark indicates a 3.1% decline from the year-ago quarter's reported number. PM delivered an earnings beat of 3.2%, on average, in the trailing four quarters.
Conagra Brands CAG currently has an Earnings ESP of +2.66% and a Zacks Rank of 3. The company is likely to register declines in the top and bottom lines when it reports fourth-quarter fiscal 2024 results. The Zacks Consensus Estimate for CAG's quarterly earnings was unchanged in the last 30 days at 57 cents per share. The consensus estimate for earnings indicates an 8.1% decline from the year-ago quarter's reported number.
The Zacks Consensus Estimate for Conagra Brands' quarterly revenues is pegged at $2.9 billion, suggesting a decline of 1.3% from the figure reported in the prior-year quarter. CAG has delivered an earnings surprise of 6.8%, on average, in the trailing four quarters.
Clorox CLX currently has an Earnings ESP of +2.14% and a Zacks Rank #3. The company is likely to register declines in the top and bottom lines when it reports fourth-quarter fiscal 2024 results. The Zacks Consensus Estimate for quarterly revenues is pegged at $1.5 billion, which suggests a rise of 8.4% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for quarterly earnings has been unchanged at $1.53 per share in the past 30 days. However, the consensus mark for CLX's earnings indicates a decline of 2% from the year-ago quarter's reported number. CLX has delivered an earnings surprise of 128.5%, on average, in the trailing four quarters.

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