Constellation Brands’ Shares Tumble on Weak Wine Sales in 3Q; Shares Look Attractive
Shares of narrow-moat Constellation Brands fell around 12% after the firm reported third-quarter results, which included sales growing 9% and operating margin expanding 100 basis points to 28%. We primarily attribute this reaction to weak performance in the firm’s wine business (roughly one third of sales), which posted a 3% decline in depletions. Management now expects full-year sales in this business to decline by a low-single-digit rate, versus a 2%-4% increase prior. Accordingly, it estimate...Constellation Brands is an international beverage alcohol company. The company is a producer and marketer of beer, wine and spirits with operations in the U.S., Mexico, New Zealand, Italy and Canada. The company has two segments: Beer, in which the company is engaged in the U.S. beer market that includes the imported, craft, domestic super premium, and alternative beverage alcohol categories and it has the right to import, market and sell these Mexican beer brands in the U.S.; and Wine and Spirits, in which its wine portfolio is supported by grapes purchased from independent growers, primarily in the U.S., New Zealand and Chile, and vineyard holdings in the U.S., New Zealand and Italy.
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