We expect the international producer and marketer of beverage alcohol brands, Constellation Brands Inc. STZ, to beat expectations when it reports first-quarter fiscal 2016 results on Jul 1.
Why a Likely Positive Surprise?
Our proven model shows that Constellation Brands is likely to beat earnings because it has the right combination of two key ingredients.
Zacks ESP: Constellation Brands currently has an Earnings ESP of +3.28%. This is because the Most Accurate estimate of $1.26 stands above the Zacks Consensus Estimate of $1.22.
Zacks Rank: Constellation Brands carries a Zacks Rank #2 (Buy). Note that stocks with a Zacks Rank #1, 2 or 3 have a significantly higher chance of beating earnings. Conversely, the Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
The combination of Constellation Brands’ Zacks Rank #2 and Earnings ESP of +3.28% make us confident of an earnings beat.
What is Driving the Better-Than-Expected Earnings?
Constellation Brands has been performing well on the back of its strategy of driving long-term growth through acquisitions and expansions, its efforts to include new products in its wine and spirits businesses and strong demand for beer. The company’s top line is benefiting from the complete consolidation of the beer business, which was acquired last year.
Owing to its strategic endeavors, the company is witnessing robust depletion trends and increasing market share in the U.S. wine and spirits category. Moreover, the company is increasing its distribution points in retail and effectively executing its strategic merchandising initiatives, aimed at bolstering sales.
Looking forward, the company expects its growth momentum to continue, which is well reflected in its robust fiscal 2016 earnings guidance. Given the aforementioned positives and a favorable outlook for fiscal 2016, we remain optimistic about the company’s upcoming results.
Stocks That Warrant a Look
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Aaron’s Inc. AAN has an Earnings ESP of +8.70% and a Zacks Rank #2.
Gap Inc. GPS has an Earnings ESP of +1.52% and a Zacks Rank #3 (Hold).
L Brands Inc. LB has an Earnings ESP of +1.49% and a Zacks Rank #3.
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