Shares of Constellation Brands (STZ), a New York-based alcohol beverage company, closed 1% higher on Wednesday after it reported strong financial results for the fiscal first quarter ended May 31.
The company produces and sells spirits, wine, and beer in Italy, New Zealand, Mexico, and the U.S. (See Constellation stock chart on TipRanks)
Adjusted earnings per share (EPS) increased 3% year-over-year to $2.51, beating the Street’s estimates of $2.32.
Net sales also went up 3% year-over-year to $2.03 billion, slightly beating analysts’ expectations of $2.02 billion.
Net sales of the Beer Business rose 14% year-over-year to $1.6 billion, while the Wine and Spirits segment’s net sales slipped 22% to $455 million.
Furthermore, the company plans incremental share repurchases of around $500 million during the second quarter.
CFO of Constellation Brands Garth Hankinson said, “We continue to deliver strong operating performance and cash flow results which enabled significant share repurchase activity during the quarter. This underscores our commitment to execute our goal of returning value of $5 billion to shareholders in the form of dividends and share repurchases.”
For fiscal year 2022, the company expects EPS to be between $10 and $10.30.
Goldman Sachs analyst Bonnie Herzog recently reiterated a Buy rating on the stock with a price target of $275 (17.6% upside potential).
In anticipation of the first-quarter results, the analyst said, “We think the set-up looks good ahead of the print, especially given the market’s lowered expectations on the top line given out-of-stock/supply issues.”
Overall, the stock has a Strong Buy consensus rating based on 12 Buys and 2 Holds. The average Constellation price target of $267.93 implies 14.55% upside potential from current levels. The company’s shares have gained 25.8% over the past year.
According to TipRanks’ Smart Score rating system, Constellation scores an 8 out of 10, suggesting that the stock is likely to outperform market averages.
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