Photo by Instagram @cbrands

Constellation Brands (STZ), the beverage giant behind Corona and Modelo beers, saw its stock price rise in early trading on Thursday. This jump follows the company reporting better-than-expected earnings for the fourth quarter of fiscal year 2024, driven by a surge in beer sales.

Strong Q4 Results

• Sales reached $2.14 billion, exceeding analyst expectations and surpassing the $2 billion reported in the same quarter last year.

• Adjusted income came in at $414.2 million, translating to $2.26 per share, beating analyst estimates of $385.9 million and $2.10 per share, respectively.

Beer Sales Lead Growth

• Beer sales were a major growth driver for the third consecutive quarter, reaching $1.7 billion. This represents an 11% increase compared to the previous year.
• Modelo Especial even became the top-selling beer brand in the US for the entire fiscal year.

On #DiaDeLosMuertos, we honor loved ones who have passed through cultural celebrations and traditions that are core to our iconic brands.
We are amplifying voices celebrating biculturalism, history, and connections with @CoronaUSA. pic.twitter.com/SNaPJqTYiY

— Constellation Brands (@cbrands) November 2, 2022

Wine and Spirits Struggle

• Unlike beer, wine and spirits sales fell short. They dropped 6% year-over-year to $436.4 million and are down 9% for the whole fiscal year.
• Constellation attributed this decline to challenges in the US wholesale market and international destocking, partially offset by growth in their direct-to-consumer channel.

To Kalon Vineyard Company’s H.W.C. Cabernet Sauvignon 2019 is the first Constellation-farmed #vineyard to earn a perfect 100-point score from Wine Critic @JamesSuckling – and a perfect choice for #NationalWinetastingDay! pic.twitter.com/YTzZttPOuJ

— Constellation Brands (@cbrands) November 4, 2022

Dividend Increase and Future Outlook

• The company’s board approved a 13% increase in the quarterly dividend, bringing it to $1.01 per share for Class A stock.
• Constellation projects continued growth in fiscal 2025, with adjusted earnings per share expected to be between $13.50 and $13.80, exceeding the $12.06 reported in fiscal 2024.
• Beer sales are forecasted to grow by 7% to 9%, while wine and spirits are expected to see a slight decline or modest growth at best.

Stock Performance

Constellation’s stock price jumped over 2% initially but settled around a 1% gain by mid-morning at roughly $268 per share. This year, the beverage company’s stock has risen approximately 10%, and over the past year, it has gained more than 17%.

Oliver Brown