Investors' attitudes toward Constellation Brands (NYSE:STZ) have changed rapidly in recent weeks. The stock had been down nearly 50% as the broader market dived in early March, but shares are up over 50% in the last three months. On Wednesday, July 1, we'll find out whether that bubbling optimism was well deserved when the alcoholic beverage giant announces its fiscal first-quarter results.

Sure, the start to fiscal 2021 isn't likely to look at all like the pre-COVID-19 outlook that management issued in early April. Sales certainly dropped as bars and restaurants remained closed for most of the period. But Constellation Brands still might have some good news for investors in this week's report.

Let's take a closer look.

A man shopping for beer.

Image source: Getty Images.

Great expectations

From Molson Coors to Anheuser-Busch InBev, the news has been mostly bad for alcoholic beverage producers during the early days of the pandemic. The collapse in away-from-home drinking occasions, including concerts, sports events, and restaurant visits, has pressured overall demand for beer despite a surge in growth from supermarket retailing partners.

Constellation Brands' fiscal first quarter started on March 1, and so it will include the biggest drag from social-distancing efforts that reached their peak in the U.S. in April and early May. That helps explain why investors are bracing for modest sales declines to reverse the 4% increase the company posted in its last quarterly outing.

There will be plenty of noise in those demand trends, but look for management to highlight continued market share strength for core beer franchises like Corona and Modelo. We'll get important updates about the retailing strength of its new Corona hard seltzer launch, too.

Fixing its weaknesses

Management couldn't do much about the wider industry's challenges in recent weeks, but it still aimed to make progress in shoring up a few operating and financial weaknesses. Those initiatives start with the wine and spirits segment, which shrank 5% in the past year and posted reduced profitability.

CEO Bill Newlands and his team have targeted improving results in this division, in part thanks to its major divestment deal with E.J. Gallo. They've backed up those comments with concrete targets, including an operating-profit margin of over 30%, compared to the 26% it reached in late fiscal 2020. That figure, plus updates on market share for core brands like Kim Crawford and The Prisoner brand family, should tell investors whether Constellation is still on track in its recovery plan for this segment.

Looking ahead

Shareholders likely won't get a detailed outlook this week given the uncertain state of the economy and COVID-19's shifting threat potential. Instead, Constellation Brands might withdraw its prior targets that called for beer sales growth between 7% and 8% and gains of roughly 3% in its core wine and spirits brands.

Yet management will have a few weeks of fresh data on consumer demand trends as major parts of the U.S. dining-out and entertaining industries reopened. And those trends might inform Constellation's expectations for a quick return to quarterly sales growth.

Meanwhile, it will be interesting to see whether the company still believes it will generate over $2 billion in operating cash flow this fiscal year, or if the pandemic has pressured it enough to threaten that core financial target.