You can wake up to a hot cup of earnings from Constellation Brands (NYSE:STZ) (NYSE:STZ-B) tomorrow morning. Will the report be 80 proof, or more like a watered-down light beer? Let's find out.

What analysts say:

  • Buy, sell, or waffle? Fourteen analyst firms keep a steady eye on the booze producer, with five of them rating the stock a buy, two saying sell, and the other seven rating it a hold. It's a three-star stock in the Motley Fool CAPS investor community, with ratings from 66 investors like you and me.
  • Revenues. $1.5 billion of revenues would satisfy market expectations and represent 18% growth over the $1.27 billion reported last year.
  • Earnings. The analysts expect earnings around $0.60 per share, up from $0.52 a share a year ago.

What management says:
"Consistent performance over time is an important measure of our market strength," says CEO Richard Sands. He likes his company's heady growth in key markets such as the United States, Australia/New Zealand, and Europe. Revenue growth in imported beers has been held back by a shortage of bottles, not by demand, a bottleneck that should be gone by now.

What management does:
The margins aren't brain-surgeon steady, but close enough. Considering the company's acquisition habit, you have to admire the fiscal discipline that keeps these ratios nearly immobile while incorporating new products, quarter after quarter.

Margins %

May-05

Aug-05

Nov-05

Feb-06

May-06

Aug-06

Gross

28.1%

28.4%

29.0%

29.1%

29.3%

29.1%

Oper.

14.7%

14.7%

15.4%

15.9%

16.7%

15.8%

Net

7.1%

6.9%

6.9%

7.1%

7.2%

6.6%


These numbers are showing a very mature company, long out of the zippy growth stage and more into growing its asset base and stockholders' equity.

Performance Ratios

May-05

Aug-05

Nov-05

Feb-06

May-06

Aug-06

ROA

6.0%

6.2%

6.4%

6.0%

6.4%

5.7%

ROE

11.9%

11.6%

11.3%

11.3%

11.4%

10.7%

YOY Rev. Growth

14.8%

15.1%

16.8%

12.6%

9.5%

10.8%

YOY Earnings Growth

29.4%

9.0%

7.9%

17.7%

11.4%

6.1%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
The company brands itself as the largest wine producer in the world, by volume. Over the summer, it also signed a 10-year agreement with Corona brewer Grupo Modelo, making Constellation the sole importer of Corona, Nuevo Modelo, and many other Mexican beers into the U.S. for the foreseeable future. With the booming Hispanic population, and the cultural halo effect that trend imposes on us non-Latinos, that product line could power growth for a long time.

I still think that Constellation might be interested in distributing more foreign beer brands here, having proved its mettle with the Corona success alongside lesser lights like St. Pauli Girl and Tsingtao. Heineken may be set for now, but there are some fine, underdistributed beers coming out of Denmark and Germany that could surely benefit from a deal.

But that's for another conference call. This time, Constellation simply looks strong because it relies more on wine and beer than on hard liquor, a segment that has hit price increases on its raw materials lately. Will that translate into a nice, fragrant bouquet around tomorrow's earnings? Stay tuned.

Competitors:

  • Diageo (NYSE:DEO)
  • Anheuser-Busch (NYSE:BUD)
  • Fortune Brands (NYSE:FO)
  • Molson Coors (NYSE:TAP)
  • Brown-Forman (NYSE:BF-B)

Anheuser-Busch is a Motley Fool Inside Value selection and Diageo is a Motley Fool Income Investor pick. Find out why with a free 30-day trial to either newsletter -- or both.

Fool contributor Anders Bylund holds no position in any of the companies discussed here, and prefers Swedish vodka. You can check out Anders' holdings if you like, and Foolish disclosure packs a punch every time.