As the Q2 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the beverages and alcohol industry, including Constellation Brands (NYSE:STZ) and its peers.
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 explosion of alcoholic craft beer drinks or the steady decline of non-alcoholic sugary sodas. 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 12 beverages and alcohol stocks we track reported a mixed Q2. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 13.1% below.
After much suspense, the Federal Reserve cut its policy rate by 50bps (half a percent) in September 2024. This marks the central bank’s first easing of monetary policy since 2020 and the end of its most pointed inflation-busting campaign since the 1980s. Inflation had begun to run hot in 2021 post-COVID due to a confluence of factors such as supply chain disruptions, labor shortages, and stimulus spending. While CPI (inflation) readings have been supportive lately, employment measures have prompted some concern. Going forward, the markets will debate whether this rate cut (and more potential ones in 2024 and 2025) is perfect timing to support the economy or a bit too late for a macro that has already cooled too much.
Thankfully, beverages and alcohol stocks have been resilient with share prices up 6.2% 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 $2.66 billion, up 5.8% year on year. This print was in line with analysts’ expectations, and overall, it was a strong quarter for the company with optimistic earnings guidance for the full year and a decent beat of analysts’ gross margin estimates.
The stock is down 2.3% since reporting and currently trades at $252.87.
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Best Q2: Celsius (NASDAQ:CELH) With its proprietary MetaPlus formula as the basis for key products, Celsius (NASDAQ:CELH) offers energy drinks that feature natural ingredients to help in fitness and weight management.
Celsius reported revenues of $402 million, up 23.4% year on year, outperforming analysts’ expectations by 2.4%. The business had a very strong quarter with a solid beat of analysts’ gross margin estimates.
Celsius pulled off the fastest revenue growth among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 24.2% since reporting. It currently trades at $31.36.
Slowest Q2: Boston Beer (NYSE: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 $579.1 million, down 4% year on year, falling short of analysts’ expectations by 3.1%. It was a disappointing quarter as it posted a miss of analysts’ earnings estimates.
The stock is flat since the results and currently trades at $270.79.
PepsiCo (NASDAQ:PEP) With a history that goes back more than a century, PepsiCo (NASDAQ:PEP) is a household name in food and beverages today and best known for its flagship soda.
PepsiCo reported revenues of $22.5 billion, flat year on year. This print was in line with analysts’ expectations. However, it was a weak quarter as it logged a miss of analysts’ organic revenue growth estimates and underwhelming earnings guidance for the full year.
The stock is up 3.5% since reporting and currently trades at $169.40.
Keurig Dr Pepper (NASDAQ:KDP) Born out of a 2018 merger between coffee company Keurig Green Mountain and beverage company Dr Pepper Snapple, Keurig Dr Pepper (NASDAQ:KDP) boasts a powerhouse portfolio of beverages.
Keurig Dr Pepper reported revenues of $3.92 billion, up 3.5% year on year. This print met analysts’ expectations. More broadly, it was a mixed quarter as it also produced a narrow beat of analysts’ operating margin estimates but a miss of analysts’ gross margin estimates.
The stock is up 15.1% since reporting and currently trades at $37.75.
This content was originally published on Stock Story
