Constellation Gains After Profit Tops Analysts’ Estimates

Constellation Brands Inc., the world’s largest wine company, rose the most in almost two months after reporting second-quarter profit that topped analysts’ estimates, helped by sales in North America.

Constellation advanced $1.68, or 9 percent, to $20.40 at 4:15 p.m. in New York Stock Exchange composite trading, the biggest gain since Aug. 9. The shares had declined 7.9 percent this year.

Chief Executive Officer Robert Sands sold the company’s Australian and U.K. wine operations this year to focus on the North American unit. The overseas wine businesses were unprofitable in the year-ago period, according to Tim Ramey, an analyst for D.A. Davidson & Co. in Lake Oswego, Oregon.

“The stars are aligning,” Ramey said today in a note. Constellation has generated “impressive” cash flow “and put this cash to work creating significant value for shareholders.”

Constellation’s free cash flow totaled $478 million in the six months ended in August, up from $263 million in the same period last year. The cash will help Constellation pay debt while buying back shares, Sands said today on a conference call.

Net income rose 78 percent to $162.7 million, or 76 cents a share, from $91.3 million, or 43 cents, a year ago, the Victor, New York-based company said today in a statement. Excluding restructuring charges and other items, profit of 77 cents beat the 66-cent average of 9 analysts’ estimates compiled by Bloomberg.

Full-Year Forecast

The company’s brands include Robert Mondavi and Clos Du Bois wines. Revenue fell 20 percent to $690.2 million, primarily because of the sale of its Australian and U.K. wine business. Sales in North America rose 5 percent.

With stock repurchases and a tax-rate benefit, profit in fiscal 2012 will be as much as $2.10 a share. Excluding those items, Constellation reiterated its previous projection of a maximum of $2 a share on a conference call today. Analysts predicted $1.96, the average of 10 estimates compiled by Bloomberg.

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