Constellation Earnings: Profit Rises on Strong Beer Volume but Wine and Spirits Still Struggling
We plan to keep our $280 per share fair value estimate after absorbing wide-moat Constellation Brands’ fiscal 2025 first-quarter results. Revenue rose 6% on the back of an 8% sales increase in the premium beer portfolio (85% of total sales)—more than offsetting continued weakness in wine and spirits. Adjusted EPS rose 17% on expense leverage and lower interest expenses. There's little need to change our fiscal 2025 preresults projections for 6.6% sales growth and $13.70 adjusted EPS, as well as our 10-year forecasts for a 6% sales compound annual growth rate and operating margin averaging in the low 30s. Shares look undervalued, trading at 11% discount to our intrinsic valuation.