Constellation Brands (NYSE:STZ) announced fiscal fourth-quarter results this week, extending its impressive streak of market-share gains and rising profitability. The alcoholic-beverage giant also issued an aggressive growth forecast for fiscal 2019 while promising to deliver much-higher cash returns to shareholders.

Here's how the headline results compare against the prior-year period:

 Metric

Q4 2017

Q4 2016

Year-Over-Year Change

Revenue

$1.77 billion

$1.63 billion

9%

Net income

$929 million

$462 million

101%

EPS

$4.64

$2.26

105%

Data source: Constellation Brands' financial filings.

What happened this quarter?

The wine and spirits business returned to growth while Constellation Brands' beer segment again posted market-thumping sales growth, even as selling prices rose for its premium imported brands.

Two men clinking beer bottles together.

Image source: Getty Images.

Highlights of the quarter included:

  • Beer sales jumped 12% to keep full-year growth at 10%, or right within management's upgraded guidance. Revenue benefited from healthy demand in the Modelo and Corona franchises, which grew 18% and 6%, respectively. The segment's operating margin held steady at 38% as increased marketing spending offset rising average prices.
  • The wine and spirits division returned to growth, with sales rising 4% thanks mainly to the Meiomi, Black Box, and Ruffino wine brands. Operating margin inched higher by 0.8 percentage points to 27.4% of sales.
  • Constellation Brands booked a one-time $363 million benefit tied to the recent tax law changes, which helped profit double from the prior year. On an adjusted basis, net income rose by a still-healthy 28%.

What management had to say

Executives said their business approach, which focused on both driving and taking advantage of the consumer shift toward premium alcoholic beverages, led to strong operating results. "Execution of our premiumization strategy," CEO Rob Sands said in a press release, "produced best-in-class EPS growth of almost 30% [in fiscal 2018] as we continued to grow overall market share and improve margins across the business."

Management celebrated the fact that major expansion projects are wrapping up. That progress should start delivering higher profits while freeing capital they can use to support the business or reward shareholders. Constellation Brands' "exceptional financial growth and record operating cash flow," CFO David Klein said, "provided flexibility to return more than $1.4 billion to shareholders through a combination of share repurchases and dividends."

Looking forward

Executives believe the positive operating momentum will carry on into fiscal 2019, and they backed that optimism up with numbers that amount to an aggressive outlook. Sales and profits should rise by between 9% and 11% this year, they said, thanks mainly to growth in the beer segment, while wine and spirits expand by between 2% and 4%.

Lower capital expense needs, combined with a reduced tax rate and rising margins, should power operating cash flow of between $2.35 billion and $2.55 billion, compared to $1.9 billion last year and $874 million in fiscal 2017. That improving financial picture led Constellation Brands to raise its dividend by 42%, which will still leave the payout at less than one-third of the earnings the company is expected to generate over the next 12 months. That profit figure should jump to between $9.40 per share and $9.70 per share, translating to a 10% increase at the midpoint.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.