Constellation Brands Stock Falls After Earnings Miss

Results Show Slower Growth in Beer Business

Constellation Brands stock fell more than 8% in premarket trading on Thursday after the company reported weaker-than-expected earnings for its fiscal third quarter. The beverage giant, which owns brands such as Corona, Modelo, and Svedka vodka, reported net sales of $2.3 billion, a 7.1% increase from the same period last year.

However, the company's beer business, which accounts for about 70% of its revenue, grew just 3.6% in the quarter. This was below analysts' expectations of 5% growth. Constellation Brands cited several factors for the slowdown, including inflation, supply chain disruptions, and a shift in consumer preferences towards non-alcoholic beverages.

Analysts Express Concern About Margin Pressure

In addition to the weaker-than-expected sales growth, Constellation Brands also reported a decline in its gross margin. The company's gross margin fell from 50.3% in the prior-year quarter to 49.1% in the recent quarter. This was due to higher costs for ingredients, packaging, and transportation.

Analysts expressed concern about the margin pressure, noting that it could eat into Constellation Brands' profitability in the future. The company said it is taking steps to address the issue, including raising prices and cutting costs.

Stock Falls on Disappointing Results

The disappointing earnings report sent Constellation Brands stock tumbling in premarket trading. The stock fell as much as 8.9% before recovering slightly. The stock closed at $237.88 on Wednesday, down 1.5% from the previous close.

Despite the sell-off, analysts remain generally positive on Constellation Brands. The company is a leader in the global beverage industry and has a strong portfolio of brands. However, the analysts said the company needs to address the margin pressure and improve its beer sales growth in order to drive future stock gains.