The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Constellation Brands (NYSE: STZ) and the rest of the beverages, alcohol, and tobacco stocks fared in Q1.
These companies' performance is influenced by brand strength, marketing strategies, and shifts in consumer preferences. Changing consumption patterns are particularly relevant and can be seen in the rise of cannabis, craft beer, and vaping or the steady decline of soda and cigarettes. Companies that spend on innovation to meet consumers where they are with regards to trends can reap huge demand benefits while those who ignore trends can see stagnant volumes. Finally, with the advent of the social media, the cost of starting a brand from scratch is much lower, meaning that new entrants can chip away at the market shares of established players.
The 15 beverages, alcohol, and tobacco stocks we track reported a mixed Q1. As a group, revenues missed analysts’ consensus estimates by 0.5%.
In light of this news, share prices of the companies have held steady as they are up 3.3% on average since the latest earnings results.
Constellation Brands (NYSE: STZ)
With a presence in more than 100 countries, Constellation Brands (NYSE: STZ) is a globally renowned producer and marketer of beer, wine, and spirits.
Constellation Brands reported revenues of $2.16 billion, up 1.2% year on year. This print exceeded analysts’ expectations by 1.9%. Despite the top-line beat, it was still a mixed quarter for the company with a solid beat of analysts’ gross margin estimates but full-year EPS guidance missing analysts’ expectations.
The stock is up 1.6% since reporting and currently trades at $186.20.
Read our full report on Constellation Brands here, it’s free.
Best Q1: Zevia (NYSE: ZVIA)
With a primary focus on soda but also a presence in energy drinks and teas, Zevia (NYSE: ZVIA) is a better-for-you beverage company.
Zevia reported revenues of $38.02 million, down 2% year on year, outperforming analysts’ expectations by 1.7%. The business had a very strong quarter with a solid beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates.
The market seems happy with the results as the stock is up 38.2% since reporting. It currently trades at $2.82.
Is now the time to buy Zevia? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: Molson Coors (NYSE: TAP)
Sporting an impressive roster of iconic beer brands, Molson Coors (NYSE: TAP) is a global brewing giant with a rich history dating back more than two centuries.
Molson Coors reported revenues of $2.30 billion, down 11.3% year on year, falling short of analysts’ expectations by 5.1%. It was a disappointing quarter as it posted a significant miss of analysts’ adjusted operating income estimates.
As expected, the stock is down 4.6% since the results and currently trades at $54.19.
Read our full analysis of Molson Coors’s results here.
Boston Beer (NYSE: SAM)
Known for its flavorful beverages challenging the status quo, Boston Beer (NYSE: SAM) is a pioneer in craft brewing and a symbol of American innovation in the alcoholic beverage industry.
Boston Beer reported revenues of $453.9 million, up 6.5% year on year. This print topped analysts’ expectations by 4.1%. Overall, it was a very strong quarter as it also put up a solid beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates.
Boston Beer delivered the biggest analyst estimates beat among its peers. The stock is down 2.7% since reporting and currently trades at $235.63.
Read our full, actionable report on Boston Beer here, it’s free.
Coca-Cola (NYSE: KO)
A pioneer and behemoth in carbonated soft drinks, Coca-Cola (NYSE: KO) is a storied beverage company best known for its flagship soda.
Coca-Cola reported revenues of $11.22 billion, flat year on year. This number surpassed analysts’ expectations by 0.6%. Zooming out, it was a satisfactory quarter as it also logged a decent beat of analysts’ organic revenue estimates but EBITDA in line with analysts’ estimates.
The stock is flat since reporting and currently trades at $71.81.
Read our full, actionable report on Coca-Cola here, it’s free.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
Want to invest in winners with rock-solid fundamentals? Check out our Strong Momentum Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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