Constellation Brands profit tops view

By Martinne Geller

NEW YORK (Reuters) - Constellation Brands Inc (STZ.N: Quote, Profile, Research) posted higher-than-expected quarterly profit and forecast fiscal-year earnings above Wall Street estimates on Thursday, sending the wine maker's shares up as much as 9 percent.

But much of the earnings surprise stemmed from a lower tax rate, and analysts said there were still questions about the company's fundamental business, which also includes beer and spirits.

The owner of wine brands such as Robert Mondavi, Ravenswood and Vendange posted a net loss of $831.9 million, or $3.90 per share, in the fourth quarter that ended February 29, compared with a year-earlier net profit of $70.2 million, or 29 cents per share.

But excluding items such as $888 million in acquisition-related costs and restructuring charges, Constellation earned 34 cents per share. Analysts on average were expecting 25 cents, according to Reuters Estimates.

Constellation said its effective tax rate in the quarter was 14.9 percent, while two analysts said they had been expecting a rate of 37 percent.

Goldman Sachs analyst Judy Hong, who said the core results had missed her expectations, said the stock had rallied in part because of Constellation's positive outlook.

"Our sense is that while market expectations tilt to the cautious side, we await further clarity on the underlying business fundamentals to adopt a more optimistic view," Hong wrote in a research note.

Constellation, which also owns 99 Schnapps and Black Velvet Canadian Whisky, said interest expense rose 25 percent during the quarter, mostly due to recent acquisitions and $500 million in share buybacks.