What Happened?
Shares of beer, wine, and spirits company Constellation Brands (NYSE: STZ) jumped 2.1% in the morning session after the company reported third-quarter financial results that exceeded Wall Street's expectations for both sales and profit. Although the beverage maker's sales of $2.48 billion marked a 15% decrease from the previous year, the figure was still slightly ahead of the $2.47 billion analysts had forecasted. Similarly, adjusted earnings per share came in at $3.63, comfortably above consensus estimates of $3.41. The positive investor reaction came despite the company lowering its full-year guidance for organic revenue growth and adjusted earnings per share. Investors appeared to focus on the better-than-expected results for the quarter, forgiving the weaker outlook.
After the initial pop the shares cooled down to $142.20, up 2.5% from previous close.
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What Is The Market Telling Us
Constellation Brands’s shares are not very volatile and have only had 3 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 9 months ago when the stock dropped 16.7% on the news that the company reported weak fourth quarter results, which fell below Wall Street's expectations for most of the key metrics we track, including sales, operating profits, and earnings. In addition, management lowered full-year earnings guidance, which is worrisome. Overall, this was a challenging quarter for the company.
Constellation Brands is down 36.1% since the beginning of the year, and at $142.20 per share, it is trading 42.1% below its 52-week high of $245.71 from October 2024. Investors who bought $1,000 worth of Constellation Brands’s shares 5 years ago would now be looking at an investment worth $783.54.
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