Beer, wine, and spirits company Constellation Brands (NYSE:STZ) reported Q1 CY2024 results topping analysts' expectations, with revenue up 7.1% year on year to $2.14 billion. It made a non-GAAP profit of $2.26 per share, improving from its profit of $1.98 per share in the same quarter last year.

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With a presence in more than 100 countries, Constellation Brands (NYSE:STZ) is a globally renowned producer and marketer of beer, wine, and spirits.

Beverages and Alcohol

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.

Sales Growth

Constellation Brands is one of the larger consumer staples companies and benefits from a well-known brand, giving it customer mindshare and influence over purchasing decisions.

As you can see below, the company's annualized revenue growth rate of 5% over the last three years was weak for a consumer staples business.

This quarter, Constellation Brands reported solid year-on-year revenue growth of 7.1%, and its $2.14 billion in revenue outperformed Wall Street's estimates by 2.1%. Looking ahead, Wall Street expects sales to grow 5.9% over the next 12 months, a deceleration from this quarter.

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Organic Revenue Growth

When analyzing revenue growth, we care most about organic revenue growth. This metric captures a business's performance excluding the impacts of foreign currency fluctuations and one-time events such as mergers, acquisitions, and divestitures.

The demand for Constellation Brands's products has generally risen over the last two years but lagged behind the broader sector. On average, the company's organic sales have grown by 4.2% year on year.

In the latest quarter, Constellation Brands's organic sales rose 7% year on year. This growth was a well-appreciated turnaround from the 4% year-on-year decline it posted 12 months ago, showing the business is regaining momentum.

Key Takeaways from Constellation Brands's Q1 Results

We liked that Constellation Brands' organic revenue growth beat led to higher-than-expected revenue. EPS also beat in the quarter, and EPS guidance for the full year was slightly ahead of Wall Street analysts' expectations. Zooming out, we think this was a solid quarter, showing that the company is staying on track. The stock is up 1.2% after reporting and currently trades at $268 per share.

So should you invest in Constellation Brands right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.