What To Expect From Constellation Brands' (STZ) Q1 Earnings?

Constellation Brands Inc. (NYSE:STZ) is slated to report first-quarter fiscal 2018 results on Jun 29, 2017. The big question facing investors is whether this leading alcohol company will be able to maintain its positive earnings streak in the to-be-reported quarter.

Last quarter, the company delivered a positive earnings surprise of 8%. In fact, its earnings have outperformed the Zacks Consensus Estimate by an average of 7.7% in the trailing four quarters. Let’s see how things are shaping up for this announcement.

The Zacks Consensus Estimate for the fiscal first quarter has been stable in the last 30 days. The current estimate of $1.98 per share for the to-be-reported quarter reflects year-over-year growth of 28.5%. Further, analysts polled by Zacks expect revenues of $1.95 billion, which is 4.1% higher than the year-ago quarter.

What Does the Zacks Model Unveil?

Our proven model does not conclusively show that Constellation Brands is likely to beat earnings estimates this quarter. This is because a stock needs to have both a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP for this to happen. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Constellation Brands’ Earnings ESP is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.98. Although the company’s Zacks Rank #3 increases the predictive power of ESP, we need a positive Earnings ESP in order to be confident about an earnings surprise.

Note that we caution against stocks with Zacks Ranks #4 or 5 (Sell rated) going into an earnings announcement, especially when the company is seeing a negative estimate revision.

Factors Influencing this Quarter

Shares of Constellation Brands have gained 13.2% in the last three months, outperforming the Zacks categorized Beverages – Alcohol industry’s growth of 2.8%. This is mainly due to strong brand portfolio, strategic initiatives and robust quarterly results.

The company’s focus on brand building, strength in its beer business and efforts to include new products in its wine and spirits portfolio are the key growth drivers. Further, it has been gaining from effective integration and growth of recently acquired brands, higher margins, solid overall depletion trends and strong consumer demand.

In fact, these factors assisted the company to post its 10th and eighth straight earnings and sales beat, respectively, in the last reported quarter. Further, the company issued an impressive fiscal 2018 view, anticipating adjusted earnings guidance in the range of $7.70–$8.00 per share.

While these factors make us optimistic about Constellation Brands’ upcoming results, we prefer to remain cautious, as the recent sale of the Canadian wine business is likely to hurt results to an extent. Stiff competition, currency fluctuations and the risk of increasing taxes remain concerns.

Stocks Poised to Beat Earnings Estimates

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Darden Restaurants Inc. (NYSE:DRI) is scheduled to report earnings on Jun 27. It has an Earnings ESP of +3.94% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Tupperware Brands Corporation (NYSE:TUP) is expected to release earnings on Jul 19. It has an Earnings ESP of +7.45% and a Zacks Rank #2.

McDonald's Corporation (NYSE:MCD) is slated to release earnings on Jul 25. It has an Earnings ESP of +11.36% and a Zacks Rank #3.

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