By Senad Karaahmetovic
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 analysts 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,” they said in a client note.
Morgan Stanley analysts are less positive on STZ stock than their GS colleagues. The analysts 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.