Will Constellation Brands (STZ) Surprise This Earnings Season? - Analyst Blog

Constellation Brands Inc. STZ is set to report fourth-quarter fiscal 2014 results on Apr 9. Last quarter, it posted a positive surprise of 20.9%. Let us see how things are shaping up for this announcement.

Growth Factors in the Past Quarter

Driven by consolidation of the newly acquired Crown Imports business, Constellation Brands' net sales rose over 88%. The company's adjusted earnings increased approximately 75% year over year to $1.10 per share. We believe that the company's sustained focus on brand building and introduction of new products in the wine and spirits business primarily drove the better-than-expected performance. Further, owing to its strategic endeavors, Constellation Brands is witnessing steady depletion trends and an increasing market share in the U.S. wine and spirits category. Moreover, the company is increasing its distribution points in retail and effectively executing strategic merchandising initiatives to bolster sales.

Earnings Whispers?

Our proven model does not conclusively project Constellation Brands as likely to beat earnings this quarter. A stock needs to have both positive Earnings ESP and a Zacks Rank #1, 2 or 3 to surpass earnings estimates. However, that is not the case here due to the following factors:

Zacks ESP: ESP for Constellation Brands is 0.00% since the Most Accurate Estimate stands at 76 cents per share, which is in line with the Zacks Consensus Estimate.

Zacks #3 Rank (Hold): Constellation Brands' Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident of an earnings surprise call. We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into earnings announcement, especially when the company is undergoing negative estimate revisions.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows that they have the right combination of elements:

Intel Corporation INTC has an Earnings ESP of +2.70% and a Zacks Rank #3 (Hold).

Watsco Inc. WSO has an Earnings ESP of +2.13% and a Zacks Rank #3 (Hold).

Hexcel Corporation HXL has an Earnings ESP of +2.00% and a Zacks Rank #3 (Hold).