Wine and spirits distributor Constellation Brands
What analysts say:
- Buy, sell, or waffle? Eleven of the 14 analysts covering Constellation say to hold onto your wine glasses, while two say it's OK to drink more heartily. Only one says "none for the road," with a sell rating.
- Revenue. Sales are expected to fall steeply at the distributor, down 38% to $878.8 million.
- Earnings. That should lead to a 26% drop in profits, down to $0.32 per share.
What management says:
The cloudy state of the international wine market continues to fog Constellation's business, as an oversupply in Australia has flooded the wine market, particularly in the U.K. As it works down distributor inventories here at home and tries to revive the wine business across the pond, Constellation's prospects for improvement remain marginal.
Further complicating its strategy will be an accounting change it undertook in relation to its acquisition of Crown Imports, producer of Corona beer. While the long-term trend should work out for Constellation in its bid to compete with Anheuser-Busch
What management does:
Despite participating in the hot tequila market, Constellation is nowhere near Diageo
|
05/06 |
08/06 |
11/06 |
02/07 |
05/07 |
|
|---|---|---|---|---|---|
|
Gross |
28.9% |
29.1% |
29.3% |
29.8% |
30.4% |
|
Operating |
15.5% |
15.5% |
15.7% |
15.4% |
14.7% |
|
Net |
7.2% |
6.6% |
6.2% |
6.4% |
5.6% |
One Fool says:
Constellation is a smaller industry player, regardless of the market it's in. It has tried to acquire its way to growth, but that's created too many moving parts to get a handle on any long-term trends. Demand for wine in the U.S. remains strong, but it will take some heady efforts for the company to gain market share or achieve the high single-digit growth rates management has set for itself.
It currently trades at a premium on a trailing-12-month P/E basis to all its rivals (except for Brown-Forman
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