In the upcoming week, markets will eye key economic data points
in the shortened week due to the Fourth of July holiday. To note,
markets will be closed on Thursday and Wednesday is a shortened
trading day for equities.
The only notable company to report earnings next week is
Constellation Brands (NYSE:
). The maker of alcoholic beverages is expected to report first
quarter results on Tuesday.
Constellation Brands, the maker of alcoholic beverages, is
expected to report fiscal first quarter earnings on Tuesday, July
2. Analysts expect the company to report earnings per share of
$0.40, down slightly from the $0.41 earned per share in the first
quarter of last year while revenue is expected to rise slightly to
$674.25 million from $673.65 million.
The analysts at J.P. Morgan are rather cautious on the stock
heading into earnings. They have a price target of $55 on the stock
and neutral rating.
"[Constellation Brands] is scheduled to report 1Q14 (3M to May
31) results on Tuesday, July 2. We look for 1Q EPS of $0.38, down
4% YoY, dampened by 1) +$10m in interest expense YoY related to the
Crown purchase; 2) +60bps rise in tax rate to 37.0% 3) a stronger
US dollar vs. the Canadian dollar and 4) +2.3% increase in diluted
"We anticipate reported wine sales to rise by 4.5% to $663.2mn,
with wine volumes +4%, wine revenue/case +1% and FX -0.5%. Equity
income is expected to rise 6.3% YoY to $64.7m, including a 4%
increase in beer revenue. We look for reported beer volumes to rise
2.5% (including -100bps from the loss of St. Pauli Girl) and +1.5%
in beer price/mix."
"STZ has the potential to generate growth, margins, returns and
free cash flow that could put it among the top-tier consumer
staples companies. Our Neutral rating is based on our view that
most of the benefits are still ~2 years away."
Goldman Sachs is also cautious on the stock ahead of earnings.
They too have a neutral rating on the stock but have a slightly
higher price target at $60.
"STZ reports 1Q FY14 results Tuesday, July 2, and we forecast
EPS of $0.39 (consensus $0.40). We are, however, above STZ guidance
for the full year at $2.93 vs. $2.55-$2.85 and expect STZ to take
the bottom end of guidance up by about $0.05. We revise our EPS
estimates modestly to incorporate more favorable FX and adjusting
for the timing of the Crown deal closing."
"We do not expect much surprise in 1Q results, as we forecast
EPS of $0.39 (consensus $0.40) on 4% wine/ spirits volume growth
and +8% wine/spirits EBIT. 1Q wine/spirits EBIT growth is likely to
be boosted as STZ laps de-load and heavy marketing spend in 1Q13.
For the full year, we still expect EBIT to come in below sales as
grape costs increase and wine pricing remains muted."
"We expect guidance to come up as the year progresses on a
likely lower tax rate and since the wide guidance range reflects
conservatism on the part of management until more details around
the beer transactions become clearer in the coming months."
Key Economics Releases
The economic data will take the forefront next week as key
releases on each day of trading should drive markets as traders
digest the health of the economy and the probability of the Fed
tapering asset purchases.
Monday is manufacturing PMI day as investors will wake up to
manufacturing data from China and the eurozone. China's
manufacturing PMI is expected to have slowed in June to 50.1 from
50.8 while manufacturing output in the eurozone is expected to
contract at the same rate as the prior reading.
Monday in the U.S. brings the manufacturing PMI domestically
followed by ISM Manufacturing Index and construction spending data.
Overnight, the RBA rate decision is due out and the bank should
comment on the recent weakness in the Australian dollar.
Tuesday, domestic vehicle sales data should be released
throughout the day alongside the weekly Redbook and factory orders.
The real action is overnight, as Wednesday kicks off services PMI
Services data is expected from China and the eurozone followed
by MBA Purchase Applications in the U.S. and the Challenger job
cuts report. Later, the ADP Employment Report, international trade
data, and the ISM Non-Manufacturing Index are all expected to be
With markets closed Thursday, jobless claims will be released
with the Non-Farm Payrolls report on Friday morning. However, on
Thursday, the Bank of England's and the European Central Bank's
interest rate decisions will be out and currency traders may want
to wake up early on the holiday for these events.
Non-farm payrolls are expected to rise 165 thousand vs. the 175
thousand gain in May while private payrolls are expected to rise
175 thousand compared to the 178 thousand gain in May. The
unemployment rate is expected to drop, however, to 7.5 percent from
Earnings Expected From: MSC Industrial Direct (NYSE:
) and Shulman Inc. (NASDAQ:
). Economic Releases Expected: Manufacturing PMIs from China, the
eurozone, Germany, France, Italy, Spain and the U.S. as well as the
ISM Manufacturing Index and construction spending.
Earnings Expected From: Acuity Brands (NYSE:
), and Constellation Brands (NYSE:
). Economic Releases Expected: the RBA rate decision, the weekly
Redbook, motor vehicle sales, and factory orders.
Earnings Expected From: International Speedway (NASDAQ:
). Economic Releases Expected: Services PMIs from China, the
Eurozone, Germany, France, Italy, Spain, and the U.S. followed by
the Challenger Job Cut Report, the ADP Employment report,
international trade data, and the ISM Non-Manufacturing PMI.
Economic Releases Expected: interest rate decision from the Bank of
England and the European Central Bank.
Economic Releases Expected: German factory orders, U.S. Employment
Situation Report, initial jobless claims, the Canadian employment
report, and the Canadian Ivey PMI.
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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