Constellation Brands Inc - Class A
Q2 2026 Earnings
Market Reaction
S&P 500 over the same 30 days: +0.18%.
Did STZ Beat Earnings? Q2 2026 Results
Constellation Brands delivered a stronger-than-expected second quarter for fiscal 2026, posting comparable EPS of $3.63 against a consensus estimate of $3.41, a beat of 6.51%, even as reported revenue of $2.48 billion slipped 15.0% year-over-year and edged past the $2.46 billion consensus by less than 1%. The headline revenue decline was largely a story of portfolio transformation rather than organic deterioration; Wine and Spirits net sales collapsed 65% to $136.00 million, almost entirely reflecting the SVEDKA and 2025 Wine divestitures rather than demand erosion in the retained higher-end portfolio. The Beer Business, still the company's core engine, saw net sales fall 7% to $2.35 billion amid distributor inventory rebalancing and socioeconomic pressure on consumers, though Pacifico and Victoria continued to gain traction with nearly 14% and 19% growth, respectively. Management affirmed its comparable EPS outlook of $11.30 to $11.60 for the full year and reaffirmed free cash flow targets of $1.30 billion to $1.40 billion, signaling confidence even as the broader consumer environment remains under pressure.
- Beer Business remains #1 dollar share gainer in U.S. beer category
- Modelo Especial maintained position as #1 brand in dollar sales in U.S. beer
- Pacifico delivered nearly 14% depletion growth and Victoria nearly 19% depletion growth
- Beer depletions declined 2.7% driven by socioeconomic headwinds and dampened consumer demand
- Beer operating margin contracted 200 basis points to 40.6% from increased COGS including aluminum tariffs and fixed cost absorption
- Wine and Spirits net sales declined 65% largely due to SVEDKA Divestiture and 2025 Wine Divestitures
- Wine and Spirits organic net sales declined 19% with portfolio delivering approximately 2% U.S. depletion growth
- Cost savings and efficiency initiatives continue to deliver incremental benefits
“While we continue to navigate a challenging socioeconomic environment that has dampened consumer demand, our teams remain focused on executing against our strategic objectives, including driving distribution gains, disciplined innovation, and investing behind our brands. Against that backdrop, we are pleased to continue to lead the U.S. Beer industry in dollar share gains, drive continued outperformance versus the U.S. Wine industry in our Wine and Spirits Business, and consistently deliver against our capital allocation priorities.”
Constellation Brands CEO, on the earnings call
Forward Guidance & Outlook
Constellation Brands updated its fiscal 2026 reported EPS outlook to $9.86-$10.16 and affirmed its comparable EPS outlook of $11.30-$11.60. The company expects enterprise organic net sales to decline 4%-6%, with Beer net sales declining 2%-4% and Wine and Spirits organic net sales declining 17%-20%. Enterprise operating income growth (decline) is expected at 667%-687% on a reported basis and (11%)-(9%) on a comparable basis, with Beer operating income declining 7%-9% and Wine and Spirits organic operating income declining 97%-100%. Corporate expense is guided at approximately $225 million and net interest expense at approximately $370 million. The company targets operating cash flow of $2.5-$2.6 billion, capital expenditures of approximately $1.2 billion (including approximately $1.0 billion for Mexico beer operations), and free cash flow of $1.3-$1.4 billion. Tax rate is expected at approximately 18% reported and 19% comparable, with weighted average diluted shares outstanding of approximately 176 million.
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Figures from SEC filings and company reports. Not investment advice.