Constellation Brands Adjusts Earnings Outlook for 2025
Constellation Brands Adjusts Fiscal 2025 Forecast
Constellation Brands (NYSE: STZ) has made significant adjustments to its fiscal 2025 forecast regarding comparable earnings per share (EPS). Although shares initially dropped during premarket trading, they bounced back after the market opened.
Updated EPS Expectations
The company now anticipates full-year EPS in the range of $13.60 to $13.80, a slight increase from its earlier estimate of $13.50 to $13.80. This is also in line with analysts’ estimates which stood at $13.68.
Revised Sales Growth Projections
In addition to EPS adjustments, Constellation Brands has revised its outlook for net sales growth. The new expectation is an increase of 4% to 6%, which is a reduction from the previous projection of 6% to 7%.
Operating Cash Flow Estimates
The forecast for operating cash flow remains uninterrupted, with expectations still set between $2.8 billion and $3.0 billion. The consensus estimate is approximately $2.98 billion, indicating the company’s stable operational capabilities amidst adjustments.
Goodwill Impairment in Wine and Spirits
Constellation Brands will also account for a non-cash goodwill impairment loss within its Wine and Spirits division, which is estimated to fall between $1.5 billion and $2.5 billion. This adjustment will be reflected in the results for the second quarter of fiscal 2025 and is included in the reported EPS outlook.
Company Strategies Amid Challenges
The company provided insights into its strategies in addressing challenges in the Wine and Spirits Business. Constellation Brands is implementing tactical pricing and marketing strategies to bolster demand for its primary brands. However, they are also experiencing operating deleveraging due to notable headwinds, which they expect will necessitate recognizing the goodwill impairment.
Confidence in Growth Amidst Market Challenges
Despite these challenges posed by the macroeconomic environment, Constellation Brands expresses confidence in its ability to meet its initial double-digit comparable EPS growth expectations. They have even raised the lower end of their initial EPS guidance range for fiscal 2025, reflecting optimism in their strategic outlook.
Stock Performance Overview
As of now, Constellation Brands’ shares have seen relatively flat performance in 2024, with a minimal decrease of less than 0.1% year-to-date. This performance underscores the company’s resilience even amid forecast adjustments and market fluctuations.
Frequently Asked Questions
What adjustments did Constellation Brands make to its EPS forecast?
Constellation Brands revised its EPS forecast for fiscal 2025, now estimating it to be between $13.60 and $13.80.
How has the sales growth outlook changed for Constellation Brands?
The company now expects its net sales growth to increase by 4% to 6%, down from the previous estimate of 6% to 7%.
What is the estimated goodwill impairment for Constellation Brands?
The goodwill impairment for the Wine and Spirits division is expected to be between $1.5 billion and $2.5 billion.
What strategies is Constellation Brands using to support its brands?
The company is taking tactical pricing and marketing actions to bolster demand for its core brands while addressing operating challenges.
What has been the stock performance of Constellation Brands in 2024?
Constellation Brands' stock has seen a flat performance in 2024, with a less than 0.1% decline year-to-date.
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