Constellation Brands Stock Soars on Strong Earnings and Dividend Hike

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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.

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.

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%.