Constellation Brands (STZ) falls on EPS miss, lowered full-year guidance

Constellation Brands (NYSE: STZ) has its shares trading almost 5% lower today the largest beer import company in the U.S. cut its full-year earnings per share (EPS) forecast.

For its fiscal third quarter, Constellation Brands reported comparable EPS of $2.83 on revenue of $2.44 billion, which compares to the Street consensus of $2.88 on sales of $2.38B. Sales topped the consensus despite wine and spirit sales coming in below the average analyst estimate.

For the full year, STZ slashed the EPS forecast to an $11-11.20 range, down from the prior $11.20-11.60 range. Analysts were expecting an EPS of $11.01.

The forecast for full-year free cash flow is now seen between $1.5B and $1.6B, up from the prior $1.3-1.4B range and above the $1.45B consensus.

Goldman Sachs analyst Bonnie Herzog said the FY guidance implies a weaker fourth quarter.

“Given the Q3 beat, mgmt raised the low end of its beer net sales and op income growth guidance, but this does imply a now much weaker FQ4. Further, mgmt lowered its EPS guidance range by $0.30 at the midpoint, which we think reflects higher interest expense related to the Sands transaction (~$0.15/shr) & lower expected buybacks,” Herzog said in a client note.

Morgan Stanley analysts, led by Dara Mohsenian, are less positive on STZ stock than their GS colleagues. The analyst said that a negative stock reaction is justified given a weaker than expected Q3 beer depletions, which is seen as "a clear negative."

Constellation Brands stock closed at $219.92 yesterday.

By Senad Karaahmetovic

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