Posted: Jan 09, 2020
Bloomberg -- Constellation Brands Inc. rose the most in six months after posting profit and sales last quarter that topped analysts’ estimates and raising its full year earnings forecast.
Comparable earnings of $2.14 a share in the third quarter was well above the $1.84 average of estimates, amid growth from its beer brands Modelo Especial and Corona. Comparable profit for the full year will be $9.45 to $9.55 a share, up from a previous forecast for as much as $9.20.
Constellation has been leaning heavily on its beer business, where it’s aggressively advertising the Modelo Mexican import brand to boost sales. The brewer also is creating new items under the Corona brand in the popular hard seltzer category, with a 90-calorie drink planned to launch this year.Executives said Wednesday that they are actively looking to divest more wine and spirits brands, which have lagged behind the growth at Modelo and Corona. The company has already sold parts of the unit to E. & J. Gallo Winery and said on a conference call that Gallo will buy its New Zealand wine label Nobilo, with the deal closing next fiscal year.Constellation has also been working on reshaping its portfolio by buying a stake in the world’s most valuable cannabis company, Canopy Growth Corp. and selling Ballast Point, a craft beer it bought for about $1 billion just four years ago.Since investing in Canopy, Constellation Chief Executive Officer Bill Newlands has said he’s not happy with its performance. On Wednesday, the company said it recognized a $534 million decrease in the fair value of the investment in the third quarter. In December, Canopy named Constellation executive David Klein as CEO, raising the odds that the beer maker will buy Canopy outright.
Constellation shares rose as much as 4.3% to $191.50 in New York Wednesday, the biggest intraday gain since June. The stock gained 18% last year, trailing the S&P 500 Index.For the company release, click here.
January 8, 2020
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