Shares of Constellation Brands dropped 11 percent in premarket trading Wednesday morning after the Corona brewer released a disappointing outlook for the fiscal year, hurt by higher interest expenses and weakness in its wine and spirits business.
Here’s what the company reported for its fiscal third quarter compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: $2.37, adjusted, vs. $2.06 expected
- Revenue: $1.97 billion vs. $1.91 billion expected
Constellation Brands said it expects to earn between $9.20 and $9.30 per share for the fiscal 2019 year, on an adjusted basis, missing analysts’ expectations of $9.43 per share. Last quarter, it forecasted earnings per share of $9.60 to $9.75 for the fiscal year.
The company, which is the third-largest beer company in the U.S., closed a $4 billion investment with the Canadian marijuana company Canopy Growth in November. Constellation Brands financed the deal with debt, and the interest expenses are expected to shave 25 cents off its per-share earnings for the year, according to the company’s estimates. The outlook it released after its second quarter excluded any impact from the investment.
The Victor, New York-based company also said that it wrote down the value of its Canopy stake by $164 million in the third quarter.
Additionally, Constellation is forecasting weakness in its wine and spirits business next quarter. The company said that it now expects both sales and operating income to decline by low-single digits. Reuters reported in October that the company was looking to sell some of its U.S.-based wine brands in a deal that could be worth more than $3 billion.
The company’s stock, which has a market value of $32.7 billion, struggled in 2018, with shares ending the year down 30 percent.
The company otherwise beat Wall Street’s expectations. The company reported fiscal third-quarter net income of $303.1 million, or $1.56 per share. Excluding items, Constellation Brands earned $2.37 per share, beating the $2.06 per share expected by analysts surveyed by Refinitiv.
Net sales rose 9 percent from the previous year to $1.97 billion, topping expectations of $1.91 billion.
Be the first to comment