Beer marker Constellation Brands (NYSE:STZ) reported its earnings last week. The company’s adjusted diluted earnings per share of $2.37 came in above analyst estimates of $2.09. It was the second straight quarter where the company beat expectations. And net sales of $2.1 billion were also higher than the $2.02 billion that Wall Street was looking for. Beer sales were particularly strong, with net sales for that segment rising 14% to $1.6 billion. Wine and spirit net revenue was soft, however, rising at a more modest rate of 5%.
Overall, it was a strong performance for the company, and Constellation Brands expects more growth ahead, with net beer sales projected to increase between 7% and 9% this year. Earnings per share will also come in between $11.15 and $11.45, up from the $10.20 that the company reported this past fiscal year (which ended Feb. 28).
The stock rose on the positive results but on a year-to-date basis, it’s still down 3% (the S&P 500, by comparison, is down around 6%). Currently, shares of the business are trading at a forward price-to-earnings multiple of 21, which investors may see as a bit steep given that the business isn’t generating incredibly high growth numbers. While its sales are rising, it may be a stretch to justify the current premium. However, this may still be a promising recovery stock to own this year and Constellation’s 1.3% dividend yield helps sweeten the deal. A return to normal in the economy in 2022 and more social gatherings should help the stock do well this year.