Constellation Brands, Inc. Class B (NYSE: STZ.B) stock climbed 5.98% on October 4th, 2018 after the company posted better than expected results for the second quarter of 2019 on surging Corona beer and wine revenue. The stock slightly fell over 0.13% on October 6th, 2018 (As of 11:08 AM GMT-4 ; Source: Google finance)
The company also raised its guidance while disclosing its Canopy Growth Corp investment has generated more than $1 billion in gains as marijuana stocks rocket on investor demand. The initial investment in Canopy has produced a $639 million unrealized gain in the second quarter and $1.3 billion since the investment in November 2017. Constellation’s latest $4 billion investment in Canadian cannabis company Canopy Growth Corp brings its stake in the company to 38%. The company held a 9.9% stake in October 2017 with the option for future investments.
Further, the strong results were driven by the Constellation beer business, which delivered exceptional performance with industry-leading depletion growth of 10% and record operating margin results. During the quarter, the beer business was the number one share gainer in the U.S. beer industry driven by accelerating Corona brand family dollar trends and Modelo Especial’s position as the top share gainer in the market. Corona brand family trends accelerated from 4% depletion growth in fiscal 2018 to 8% for this year’s first half driven by the successful launches of the Corona Premier and Corona Familiar product introductions. Corona Premier has achieved record speed to shelf and has become the 10th largest brand in the high-end and the number one high-end share gainer in very, very short order. The incrementality rate for Corona Premier is best-in-class for the launch of a new consumer product, with almost 75% of Corona Premier volume being sourced outside the Constellation beer portfolio, mostly from domestic light beers. Corona Familiar also achieved a healthy share of the U.S. beer category and its regional expansion at a rate of about 50% incrementality for the brand with velocities outpacing our plans. Corona Extra continues to provide the strong foundation needed for the portfolio to grow with strong brand equity as the number one most loved brand among Hispanic and total population drinker’s age of 21 to 54.
STZ in the second quarter of FY 19 has reported the adjusted earnings per share of $2.87, beating the analysts’ estimates for the adjusted earnings per share of $2.60. The company had reported the adjusted revenue growth of 10 percent to $2.30 billion in the second quarter of FY 19, beating the analysts’ estimates for revenue of $2.2 billion.
STZ expects fiscal 2019 earnings to be in the range of $9.60 to $9.75 per share. The company’s previous guidance was earnings of $9.40 to $9.70 per share and the current consensus earnings estimate is $9.26 per share for the year ending February 28, 2019.