For this quarter, sales rose more than 5% (up about 7% in constant currencies) as robust sales of imported beers offset anemic wine sales and a drop in revenue from spirits. Gross margins slid just a bit, and operating income wasn't all that impressive. You can go with the reported operating income growth of 2% or the company's "comparable" growth figure of 5%; neither is too good.
In an attempt to give equal air time to the bull and bear cases, I'll also note that branded wine sales were up 6% in constant currency, and U.S. branded wine sales climbed by 13%. In addition to the aforementioned strong performance in beers, the return on invested capital ticked up a little bit.
I did notice one odd thing in management's comments. The company says it's looking to grow the spirits business by growing internally and buying developing brands, but it doesn't want to buy established brands. I find that a bit odd, given the series of acquisitions the company has made in the wine business, including Robert Mondavi a little while ago and Vincor more recently.
As I suggested with my "coiled spring" comment earlier, maybe this company is about to start unleashing some real operating leverage -- a move that would spell higher earnings, higher cash flow, and better returns on capital. But given the longer-term picture, I'm skeptical of that until I start to actually see it.
In the meantime, I've developed a hardcore crush on some foreign alcohol companies, and I'm certainly more fond of them than I am of North American ideas such as Constellation, Anheuser-Busch
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).