Constellation Brands Inc - Class A
Q1 2026 Earnings
Market Reaction
S&P 500 over the same 30 days: +1.73%.
Did STZ Beat Earnings? Q1 2026 Results
Constellation Brands delivered a disappointing fiscal Q1 2026, missing on both the top and bottom lines as softer consumer demand weighed on results across the portfolio. Comparable EPS came in at $3.22, falling 2.27% short of the $3.29 consensus estimate and declining 10% year-over-year, while revenue of $2.52 billion trailed expectations by 1.60% and slid 5.5% from the prior-year period. The primary culprit was the Beer Business, where shipment volumes fell 3.3% and depletions declined 2.6% amid what management described as non-structural socioeconomic headwinds, with Beer operating margin compressing 150 basis points to 39.1% under pressure from aluminum tariffs and higher marketing costs. The Wine and Spirits segment added to the strain, swinging to a $6 million operating loss following divestitures of mainstream brands. Despite the weak quarter, the company held firm on its full-year comparable EPS outlook of $12.60 to $12.90 and maintained free cash flow guidance of $1.50 to $1.60 billion, signaling confidence that the near-term softness remains a cyclical rather than structural challenge, a view that <a href="https://247wallst.com/investing/2025/05/21/warren-buffett-going-out-with-a-bang-2-stocks-he-just-doubled-up-on/">long-term investors</a> may find reassuring given the stock's historical track record.
- Beer Business was #1 dollar share gainer in U.S. beer category with 6 of top 15 dollar share gaining brands in Circana channels
- Modelo Especial maintained #1 brand position in dollar sales despite approximately 4% depletion decline
- Pacifico continued double-digit volume and dollar growth with over 13% depletion growth, remaining #4 dollar share gainer
- Free cash flow increased 41% driven by timing of brewery capacity investments reducing capex
- Softer consumer demand driven by socioeconomic headwinds impacted overall volumes
- Wine and Spirits remaining higher-end portfolio delivered approximately 2% U.S. depletion growth
“While we continued to face softer consumer demand largely driven by what we believe to be non-structural socioeconomic factors, our teams remain focused on executing the key initiatives that underpinned the outlook we recently provided for fiscals 2026 to 2028. Against that backdrop, we are pleased to continue to lead the U.S. Beer industry in dollar share gains, to have fully repositioned our Wine and Spirits portfolio in higher-growth and higher-margin segments, and to consistently deliver against our capital allocation priorities.”
Constellation Brands CEO, on the earnings call
Forward Guidance & Outlook
Constellation Brands maintained its fiscal 2026 comparable EPS outlook of $12.60–$12.90 and updated its reported EPS outlook to $12.07–$12.37. The Beer Business continues to expect net sales growth of 0–3% and operating income growth of 0–2%. Wine and Spirits expects organic net sales decline of 17–20% and organic operating income decline of 97–100%. Enterprise organic net sales growth (decline) is expected at (2)–1%. The company maintains operating cash flow guidance of $2.7–$2.8 billion, capital expenditures of approximately $1.2 billion (including approximately $1.0 billion for Mexico beer operations), and free cash flow of $1.5–$1.6 billion. Interest expense, net is expected to be approximately $385 million. The comparable tax rate is expected to be approximately 18%, with weighted average diluted shares outstanding of approximately 176 million inclusive of share repurchases. Corporate expense is guided at approximately $265 million.
STZ YoY Financials
STZ Revenue by Segment
Figures from SEC filings and company reports. Not investment advice.