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Constellation Brands hits 52-week high ahead of Q1 2015 results

Published:  01 July, 2014

Constellation Brands (STZ) closed yesterday $88.13 just shy of the 52-week high of $88.55 it hit on June 25, and analysts are optimistic about tomorrow's Q1 results.

Constellation BrandsConstellation BrandsConstellatio Brands has seen storng financial results through fiscal year 2014 with much the same expected for 2015. Results for Q1 2015 are epxected to be released prior to the NYSE opening tomorrow.

Constellation has seen strong performance through the 2014-2015 fiscal year with the stock price rising 65.81% year on year to date. Last year's 2014 results were stronger than expected and the company posted a 92% rise in its fourth quarter adjusted earnings per share, primarily due to the acquisition and consolidation of Crown Imports. In April, at the end of the fourth quarter, the company reported adjusted earnings per share of 81 cents, exceeding analysts' expectation of 76 cents for the quarter.

With the beer business brought into the fold through the acquisition of Crown Imports, the company saw its revenue rise by 13% in Q4 to $587.8 million.

Continued positive performance and strong results are expected with the 2015 fiscal forecast for adjusted earnings per share to be in the range of $3.95- $4.15. The 2015 fiscal year will see an increase of capital expenditures, including the potential for an additional brewery acquisition to keep up with projected sales growth of beer. Operating income for the beer segment alone is expected to rise between 10%-12% for the 2015 FY. 

The wine segment is expected to grow but at a slower rate with growth projected to hit in the low-to-mid single digit range. Currently Constellation Brands is in the third phase of a consumer insights study called Project Genome, The Evolution of the Wine Consumer. Constellation Brands has been tracking wine consumer behaviour for the past 10 years through Project Genome. Originally the study was focused on premium wine consumers, but now also includes insights on both value and luxury consumers.

The study included more than 100 questions asked to 4,000 US consumers and 2,946 Canadian consumers and helped the company to develop six different consumer segments to classify a wine consumer. The six categories, three of which were just recently added, are: Overwhelmed, Image Seekers, Enthusiasts, Engaged Newcomers, Everyday Loyals and Price Driven consumers.

Comprising of more than half of the wine drinking public in the United States and Canada, these groups will have a significant influence on the future direction of the industry, according to Dale Stratton, VP of Strategic Insights for Constellation Brands.

"As one of the largest consumer research projects ever conducted by the wine industry, Project Genome provides industry-leading research to improve the overall buying experience for today's increasingly savvy wine drinkers," Stratton said. "By understanding the six distinct types of wine drinkers we identified in this study, we help our retailers and distributors more effectively reach consumers, build education programs and help wine drinkers by providing recommendations and developing products that meet their preferences, palates and price point."