On Monday, Citi reiterated a Buy rating on Constellation Brands (NYSE:STZ), with a steady price target of $305.00. The firm anticipates that the company will confirm its financial year 2025 forecasts in the upcoming first-quarter earnings report scheduled for July 3, 2023. The predictions include a 7-9% year-over-year increase in beer sales, 8-10% growth in beer operating income, and a slight 0.5% fluctuation in the wine and spirits (W&S) top line. Additionally, a decline in W&S operating income is expected, ranging from 9% to 11%.
The analyst from Citi projects beer depletions, a measure of sales from distributors to retailers, to be around 5.5%, aligning with market expectations. This figure is based on a deceleration observed in scanner data, which measures retail sales directly. The data showed a drop from low double-digit percentages in previous quarters to approximately 7% in the first quarter of 2025. The gap between depletions and scanner data is also expected to normalize to a low single-digit percentage.
Despite concerns over a potential slowdown in the summer months, as Constellation Brands cycles through strong market share gains from the previous year, the analyst remains optimistic. A depletion growth rate of approximately 5-5.5% is considered robust in light of the overall weakness in the beer category. There is also potential for better-than-expected outcomes if category growth improves or if the gap between depletions and scanner data narrows more than anticipated.
Constellation Brands' performance in the beer market is a focal point, especially as it prepares to release its quarterly financial results. The company's ability to sustain growth amidst industry challenges will be closely watched by investors and analysts alike. With Citi's endorsement and a maintained price target, Constellation Brands continues to be seen as a strong player in the beverage industry.
In other recent news, Constellation Brands, a leading beverage alcohol company, has been in the spotlight for several significant developments. RBC Capital Markets has maintained an Outperform rating on the company, acknowledging its successful track record, particularly in the beer segment. They anticipate that Constellation Brands could potentially increase future cash distributions to shareholders, marking a significant shift in the company's financial strategy. Jefferies analysts have also sustained a Buy rating on Constellation Brands, forecasting a 6% increase in beer depletions and sales growth of 6.3% for the first quarter.
TD Cowen has maintained its Buy rating, praising Constellation Brands for its strategic move to convert its stake in Canopy Growth (NASDAQ:CGC) into non-voting shares to reduce the impact on its GAAP earnings. Constellation Brands reported strong performance for fiscal year 2024, with a nearly 9% increase in comparable earnings per share (EPS), primarily driven by its beer business. Looking ahead, the company expects net sales growth in the Beer Business and stable sales in the Wine & Spirits business for fiscal year 2025. These are the recent developments that investors should keep an eye on.
InvestingPro Insights
As Constellation Brands (NYSE:STZ) gears up to confirm its FY 2025 forecasts, the latest data from InvestingPro provides a snapshot of the company's financial health and market performance. With a robust market cap of $48.05 billion and a steady P/E ratio of 27.7, the company showcases its significant presence in the beverage industry. Notably, Constellation Brands has demonstrated a consistent ability to grow its revenue, with a 5.39% increase over the last twelve months as of Q4 2024.
Investors may take comfort in the fact that Constellation Brands has raised its dividend for nine consecutive years, reflecting its commitment to shareholder returns. Additionally, the company's stock typically exhibits low price volatility, which could appeal to investors seeking stability in their portfolios. The InvestingPro Tips also highlight that Constellation Brands' liquid assets exceed its short-term obligations, suggesting a solid financial footing for the near term. Analysts remain bullish on the company's profitability, predicting positive earnings for this year.
For those considering an investment in Constellation Brands, the InvestingPro platform offers further insights and analysis, with additional tips available to help guide investment decisions. Interested readers can take advantage of a special offer using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, providing access to a wealth of investment knowledge and data.
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