Constellation Brands (NYSE: STZ) traded as much as 4% higher in pre-market trading on Wednesday after the company beat EPS estimates by 30 cents a share. The company, which owns brands including Corona Beer, Svedka Vodka, and several wine brands, also has a large stake in cannabis producer Canopy Growth (NYSE: CGC).

During the third quarter, the company earned $2.14 a share on a non-GAAP basis vs the $1.84 analysts expected. GAAP EPS of $1.85 were $0.26 ahead of expectations. When equity losses associated with its Canopy Growth stake are excluded, non-GAAP EPS were $2.39 for the quarter.

Third-quarter revenue of $2 billion was 1.5% higher than a year earlier and $50 million ahead of consensus estimates.


Beer Segment Continues to Drive Growth

Sales in the beer segment grew 8.3% to $1.31 billion, while operating income grew 14.2% to $514 million. Sales for the wine and spirits businesses fell 9.7% to $688 million, while operating income fell 12.4% to $180 million.

Constellation’s quarterly operating cash flow was $2.1 billion while free cash flow was $1.5 billion. It’s worth noting that the quarterly net income of $360 million was largely attributable to a $658 million provision for an income tax benefit.


Loss on Cannabis Investment Increases by 65%

During the quarter Constellation wrote the value of its stake in cannabis grower Canopy Growth by another $534 million, bringing the total write-down on their investment to $1.4 billion.

The company also recorded a $46.2 million gain on a reported basis for its share of Canopy Growth’s equity earnings and related activities. On a comparable basis, a $71.1 million loss was recorded. The net reported unrealized gain on the Canopy investment is $223 million.

During the nine months ended Nov. 30, the value of Constellation’s intangible assets, goodwill and equity investments fell by nearly $2.5 billion, with most of the loss attributable to its Canopy investments.


Outlook Raised

Constellation raised its full year EPS outlook to between $9.45 and $9.55, up from the previous $9 to $9.20 range. This is well ahead of the Wall Street’s $8.59 average estimate. However, the company did note that “our guidance does not reflect future changes in the fair value of the company’s investments in Canopy’s warrants and convertible debt securities.”