This week, Constellation Brands stock (STZ) is likely to disclose its fiscal 2025 first-quarter results. According to the current analysts' forecast, the alcoholic beverage company anticipates growth in revenue and earnings during the quarter.
STZ Investors Await For An Upbeat Earning Report
Wall Street anticipates a year-over-year increase in STZ earnings due to higher revenues. However, how the results compare to these estimates will likely influence the actual stock price.
The stock price could increase if the main financial metrics in the forthcoming earnings report surpass expectations. Alternatively, it may decline if the results are inadequate.
Management's discussion of business conditions during the earnings call will significantly influence the sustainability of any immediate price change and future earnings forecasts. Nevertheless, it is worthwhile to evaluate the probability of a positive earnings per share (EPS) surprise.
The current Consensus Estimate for the company's first-quarter earnings is $3.46 per share, representing an 18.9% increase from last year. The consensus revenue estimate is $2.7 billion, which indicates a 6.3% increase from the previous year's quarter.
STZ's Recent Strategy Seems Potent To Bulls
Constellation Brands' performance has been significantly enhanced for several quarters due to its efforts to elevate its brands through premiumization and its robust brand portfolio. The management's forecast is solid for expanding its beer portfolio, particularly Modelo Especial and Corona Extra.
Moreover, the premiumization strategy has been effective, as evidenced by the accelerated growth of its Power Brands. Significant growth drivers in the Wine & Spirits segment include high-end brands like Kim Crawford, Meiomi, and The Prisoner Brand Family.
The premiumization of the beer segment has resulted in growth in the flavored category, which includes seltzers, flavored beer, ready-to-drink spirits, flavored malt beverages, and traditional beer. These factors presumably influenced the reported quarter's revenue growth.
STZ Threats To Look At
Constellation Brands anticipates sustained growth in its beer brands and robust consumer demand for its premium products during the first quarter of fiscal 2025.
Nevertheless, continued inflation has resulted in the company incurring higher costs for basic materials, packaging, and logistics. Increased packaging and raw material costs are anticipated to affect margins during the fiscal first quarter.
Furthermore, the impact of increased administrative costs from brewery expansion and logistics costs due to increased shipment volumes may be reflected in profit margins.
STZ Stock Technical Analysis
The recent price shows downside pressure in the daily chart of STZ stock price, while the broader context is corrective. In that case, a clear direction might come once the price sets a valid price action from the daily candlestick formation from a reliable zone.
In the daily chart, the dynamic 200-day Simple Moving Average is below the current price, while the 50-day EMA is immediate support. As strong selling pressure is visible at the 50-day EMA line, investors should monitor how the price trades at this level before finding a stable price trend.
The volume structure supports upward pressure. The current high volume level since August 2023 is 248.27, which is below the 200-day SMA line.
Based on this structure, a valid bullish reversal from the 252.00 to 243.13 area with a daily candle above the 50-day EMA could be a potential long opportunity, targeting the 274.90 level.
However, any immediate buying pressure and a bearish rejection from the 265.70 resistance level could be a potential short opportunity, aiming for the 227.61 level.
