Constellation Brands' Stock Rises as Beer Segment Drives Q1 Profit Boom

Constellation Brands Inc. STZ shares are rising after the company posted better-than-expected first-quarter FY25 adjusted EPS.

The company reported first-quarter sales growth of 6% year-on-year to $2.66 billion, missing the analyst consensus estimate of $2.67 billion.

Net sales for the Beer segment increased 8% Y/Y to $2.272 billion, and Wine and Spirits declined 7% Y/Y to $389 million. Shipment volume for Beer climbed 7.6%, while Wine and Spirits declined 5.1%.

Gross profit increased 12% to $1.4 billion, and the operating income jumped 23% to $941.6 million. Comparable EPS of $3.57 beat the consensus estimate of $3.46.

The company generated an operating cash flow of $691 million for the quarter and a free cash flow of $315 million. Constellation Brands ended the quarter with $73.8 million in cash and equivalents.

Constellation’s board declared a quarterly cash dividend of $1.01 per share, payable on August 23, to stockholders of record as of the close of business on August 14.

“This outstanding performance supported the second largest dollar share gain within the broader Beverage industry and reinforced our significant growth outperformance relative to the entire CPG sector,” said CEO Bill Newlands.

Guidance: Constellation Brands continues to see FY25 net sales growth of 6% – 7%. It reaffirmed comparable EPS guidance of $13.50 – $13.80 against an estimate of $13.67.

The company sees an operating income growth of 10% – 12% and capital expenditures of $1.4 billion – $1.5 billion. 

Constellation Brands sees an operating cash flow of $2.8 billion – $3 billion and a free cash flow of $1.4 billion – $1.5 billion.

Price Action: STZ shares are trading higher by 2.73% at $266.00 in premarket on the last check Wednesday.

Photo: Engin Akyurt from Pixabay