Constellation Brands Inc (STZ) is gaining in premarket on Wednesday after reporting better-than-expected earnings for its first quarter. 

Shares of the beverage giant are up more than 2.0% also because its management issued upbeat guidance for the full year. 

At the time of writing, STZ is trading at about $264 – down 4.0% versus its year-to-date high in late March. 

Constellation Brands’ guidance for the full year

Constellation Brands expects its per-share earnings to fall between $13.50 and $13.80 in fiscal 2024. 

Analysts, in comparison, were at $13.65. Bill Newlands – chief executive of the New York listed firm said in a press release today:

Our beer business continued to achieve strong volume growth well above that of its category and total beverage alcohol. This outstanding performance supported the second-largest dollar share gain within the broader beverage industry and reinforced our significant growth outperformance relative to the entire CPG sector.

STZ forecasts up to $1.5 billion in free cash flow this year. Constellation Brands stock is in the green also because its board authorised $1.01 a share of quarterly cash dividend on Wednesday.

(Click on image to enlarge)

Constellation Brands’ Q1 earnings snapshot

• Earned $877 million versus the year ago $136 million
• Per-share earnings also increased from 74 cents to $4.87
• Adjusted EPS printed at $3.57 as per the earnings report
• Sales went up 6.0% year-over-year to $26.62 billion
• Consensus was $3.46 a share on $26.67 billion in sales

Constellation Brands has returned $240 million to shareholders via stock buybacks through June 2024. CEO Newlands also said on Wednesday:

Our wine and spirits business is making good progress against the operational and commercial execution initiatives identified in Q4 of fiscal 24 to support its trajectory towards this year’s guidance. All in, we continue to make progress and remain focused on our fiscal 25 outlook.

What else was noteworthy in STZ Q1 report?

Constellation Brands attributed much of the strength in its recently concluded quarter to the beer business that brought in $22.73 billion – up 8.0% on a year-over-year basis.

Operating margin in that business also improved 260 basis points to 40.6% in fiscal Q1. According to Garth Hankinson – the chief financial officer of STZ:

We lowered our net leverage ratio to 3.1x and continue to expect to achieve our ~3.0x target this fiscal year … continued to advance our brewery investments in our beer business and executed a tuck-in acquisition bringing mix and asset utilization benefits for our wine portfolio.

Wall Street currently has a consensus “buy” rating on Constellation Brands stock. Analysts see upside in it to $300 on average that suggests potential for another 14% upside from here.

More By This Author: