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Constellation Brands shares looked fizzy on Thursday after the company behind Corona and Modelo brews and Svedka vodka, posted upbeat fourth quarter results helped by beer sales and a better-than-expected earnings outlook.
Shares in the New York-based company rallied 5.3 per cent to $170 in early trading after it said profits rose to $452m or $2.26 a share, compared with $243.4m or $1.19 a share in the year ago period. Adjusting for one-time items, earnings of $1.48 a share, topped estimates of $1.36.
Sales rose 5 per cent from a year ago to $1.63bn, above analyst estimates of $1.59bn. An 11 per cent rise in beer sales helped boost the company’s top line, even as sales of wine and spirits were flat. Constellation divested its Canadian wine business to Ontario Teachers’ Pension Plan in December in a transaction that was valued at C$1.03bn ($775m).
Following the upbeat results, the company boosted its quarterly cash dividend by 30 per cent to 52 cents a share of Class A common stock and 47 cents a share of its class B common stock.
Sentiment on Constellation Brands soured and shares fell 12 per cent after Donald Trump won the presidential election in November on concerns about his plans for a border-adjustment tax and his tough stance on Mexico. However, the shares have reversed much of their losses since then and are now down 3.1 per cent since the election.
Looking ahead the company expects to report fiscal 2018 earnings in the range of $7.65 to $7.95 a share and on a comparable basis, it projected earnings in the range of $7.70 to $8 a share, above analysts’ estimates of $7.51 a share.