Constellation Brands' (STZ 0.34%) last few earnings reports haven't put investors in a celebratory mood. In fact, the company's shares have fallen 20% in the last year, even as the market has climbed 9%. Concerns weighing on the stock include rising marketing expenses in the beer portfolio, a struggling wine and spirits segment, and charges related to Constellation Brands' recent equity investment in cannabis specialist Canopy Growth (CGC 0.06%).

Yet Constellation Brands' core business hasn't shown any signs of deviating from the ambitious operating and financial targets that management laid out for fiscal 2019. Investors will find out whether the alcoholic beverage giant met those goals when it reports its earnings results on Thursday, April 4.

Four friends drinking beer in a bar

Image source: Getty Images.

Beer and wine sales

The market-share story has been a mixed bag this year. The wine and spirits division is shrinking even though management tried in recent quarters to juice volumes through higher marketing and advertising support. Despite those efforts, Constellation Brands announced a 3% drop in depletion volume -- a measure of retail consumption -- for its wine and spirits portfolio last quarter. CEO Rob Sands and his team said they're expecting better results through a focus on the premium side of the portfolio. We'll find out this week whether these moves might allow the segment to return to growth in fiscal 2020 after a projected 3% drop this fiscal year.

The beer business has been much stronger, with depletions rising 8% last quarter as shipment volumes spiked 14%. "The Modelo and Corona brand families continue to be on fire," Sands told investors back in January, after the premium imported beers soaked up more market share from the industry's biggest players.

On Thursday, investors will be looking for confirmation that Constellation's established beer brands are still outgrowing the industry, and that its latest big launch, Corona Premier, is meeting management's targets.

Check out the latest earnings call transcripts for Constellation Brands and Canopy Growth.

Profitability updates

Falling wine and spirits sales and elevated marketing spending in support of the Corona Premier rollout have combined to hurt the 2019 earnings outlook. After expanding profits by 20% or more in each of the last five fiscal years, Constellation Brands is targeting a nearly 10% increase in core earnings per share for fiscal 2019.

Looking deeper into that metric, investors are hoping to see evidence that the company's premium beverage strategy is still delivering results. These wins would show up in healthy pricing trends, especially in the beer segment, where full-year profit should expand at a slightly slower pace than the expected 11% sales increase. Margin erosion could be more significant in the wine and spirits division if management had to boost advertising spending to protect sales volumes.

Capital spending 

Constellation Brands' business is still generating plenty of cash even though earnings growth has slowed recently. Thus, look for the management team to state where it plans to direct the over $2 billion in annual operating cash flow that Constellation Brands is churning out these days.

In fiscal 2019, that cash went toward expanding and upgrading Constellation's network of Mexican breweries, buying a 35% stake in Canopy Growth, and returning cash to shareholders through dividend payments and buybacks. As executives look out to the new fiscal year, they'll likely keep those same priorities of spending on the business, making acquisitions, and rewarding shareholders directly. It's a formula that's helped the company achieve phenomenal growth since 2013, and that approach gives Constellation Brands the best shot at positioning itself for future growth.