Constellation Brands (STZ), which reported strong growth in its fiscal fourth-quarter results on Thursday, anticipates additional earnings expansion for the current year. Its flourishing beer business is a particular driver. Can the stock price keep moving higher? Let's check it out!
Constellation Brands Stock's Q4 Earnings Review
For the three months ending February 29, revenue increased to $2.14 billion from $2 billion the year prior, exceeding the average analyst forecast of $2.1 billion on Capital IQ.
CEO Bill Newlands lauded the beer division's exceptional margins and volume growth for the 56th consecutive quarter, expressing pride in the division's accomplishments. He ascribed this achievement to consistently expanding their primary beer brands, steadily accumulating market share.
In Q4, adjusted earnings per share increased to $2.26 from $1.98 in the same period last year, exceeding Wall Street's estimate of $2.10. Furthermore, the beer division achieved an operating margin of 34.4%, an increase of 30 basis points, due to advantageous pricing and cost-saving initiatives.
On the contrary, Constellation's wine and spirits division's depletions decreased by 4.6% to $436.4 million, accompanied by a 6% decline in sales. These results can be attributed to adverse market conditions that had a specific negative effect on the volumes of its premium labels.
Constellation Brands (STZ) Earnings Forecast
In anticipation of the future, Constellation Brands (NYSE: STZ) projects adjusted EPS for fiscal 2025 to range between $13.50 and $13.80, representing a significant rise from the $12.06 EPS reported in fiscal 2024. This contrasts with the market expectation of $13.43 for normalized EPS for the current year. In addition, free cash flow is anticipated to moderate to between $1.4 billion and $1.5 billion, down from $1.51 billion, a decrease of 12%, as projected by the company.
As the organization enters fiscal year 2025, CEO Newlands conveys assurance regarding the expansion potential of their beer portfolio. Simultaneously, he maintains a positive outlook regarding the growth potential of their wine and liquor division by implementing targeted commercial and operational strategies.
STZ Stock Forecast Technical Analysis
In the daily chart of STZ stock price, a clear bullish trend is visible as the recent price keeps moving higher by creating new higher highs. Moreover, the current monthly candlestick trades sideways after a solid bullish reversal in March with a bullish pre-breakout structure. In that case, a valid buying pressure above the monthly resistance followed by the U-shape recovery could be a high probability of a long opportunity.
In the main chart, the dynamic 20 day Exponential Moving Average remains below the current Constellation Brands stock price with a solid bullish reversal from the 258.07 static support level. Moreover, the daily RSI showed a bullish rebound above the 50.00 line, while the MACD Histogram remains below the neutral line.
Based on the daily market outlook, the conservative long approach in this stock is to look for a valid daily candle above the 274.00 level with a bullish flip in the MACD Histogram. In that case, an upward pressure could extend towards the 296.78 resistance level.
The alternative trading approach is to find a bearish daily close below the 258.00 level before finding another long opportunity from the 241.12 to 236.00 area.
