Goldman Sachs Views STZ Quarter As Weaker Than Expected

Constellation Brands, Inc.'s STZ 3QFY11 EPS of $0.66 was above “our estimate of $0.64 and the consensus of $0.62,” Goldman Sachs reports. “However, operating performance came in weaker than expected, as operating income was $0.09 below our estimate on softer sales and margins, partly offset by higher JV income from Modelo (+$0.03), interest expense (+$0.01), and a lower tax rate (+$0.10),” Goldman Sachs writes. “The company increased FY2011 EPS guidance to $1.80-$1.85 from $1.63-$1.78 to reflect a lower tax rate and increased free cash flow guidance to $475-$525 mn from $375-$425 mn.” Goldman Sachs said that it views the quarter as weaker than expected despite the headline EPS beat, which was driven by better equity income and a favorable tax rate. Constellation Brands closed Wednesday at $21.58.