The maker of Corona beer is plunging after slashing guidance because of its marijuana acquisition
Constellation Brands, the company behind Corona beer, beat on both the top and bottom lines.
But the company slashed its guidance for full-year comparable earnings to below Wall Street expectations.
Constellation's guidance was impacted by its recent investment in the Canadian cannabis producer Canopy Growth.
Constellation Brands, the company behind Corona beer, plunged 11.45% to $152.61 early Wednesday after slashing its guidance because of its recent marijuana investment.
Constellation Brands adjusted its full-year comp earnings guidance to $9.20 to 9.30 a share, down from its previous forecast of $9.60 to $9.75. Analysts surveyed by Bloomberg were expecting $9.43 a share.
Constellation's guidance was impacted by its recent investment in the marijuana industry. In August, the beverage maker announced a $4 billion investment in the Canadian cannabis producer Canopy Growth. The deal was closed in November, giving it a 37% stake.
"Constellation estimates the interest expense associated with this transaction to approximate $55 million before tax with an approximate $0.25 impact on fiscal 2019 comparable basis EPS results," Constellation said in a press release at the time.
But the company's updated guidance shows the impact was bigger than expected.
Constellation posted $1.97 billion of comparable sales in the third quarter, topping the $1.91 billion that was expected by Wall Street, according to Bloomberg data. Comparable earnings came in at $2.37 a share, which was $0.31 higher than what analysts were anticipating.
Constellation Brands was down 22% in the past twelve months.
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