Company Overview - Constellation Brands Inc. is primarily recognized for its beer brands, including Modelo Especial, Corona Extra, and Pacifico, and is set to report its fiscal Q1 earnings on July 2, 2025 [2] - The company has a current market capitalization of $30 billion, with total revenue over the past twelve months amounting to $10 billion [3] Financial Performance - Analysts project an EPS of $3.33 and revenue of $2.56 billion for the upcoming earnings report, reflecting a 31% decline in earnings and a 4% decrease in sales compared to the previous year [2] - In the fiscal year ending February 28, beer accounted for 84% of sales, totaling $8.5 billion, with a 40% operating margin, significantly higher than that of wine and spirits [3] - The fourth quarter saw a modest sales increase of 1% to $2.2 billion, while cost reductions led to a 6% rise in operating income [3] - The company has revised its medium-term revenue growth forecast down to 2%-4%, from a previous estimate of 6%-8% [3] Market Dynamics - More than 98% of Constellation Brands' sales are generated in the U.S., indicating potential vulnerability to emerging tariffs that could pressure margins or reduce demand [3] - The company reported operating profits of $350 million and a net income of -$81 million over the past year [3]

Constellation Brands, Inc. STZ will release earnings results for the first quarter, after the closing bell on Tuesday, July 1.Analysts expect the Rochester, New York-based company to report quarterly earnings at $3.29 per share, down from $3.57 per share in the year-ago period. Constellation Brands projects to report quarterly revenue at $2.56 billion, compared to $2.66 billion a year earlier, according to data from Benzinga Pro.On June 2, Constellation Brands announced delivery of notices of redemption for ...

Core Viewpoint - Needham analyst Gerald Pascarelli has reiterated a Buy rating on Constellation Brands, Inc. but has lowered the price forecast from $215 to $195, anticipating a weak start to fiscal year 2026 with first-quarter results expected on July 1 [1][3]. Group 1: Financial Performance Expectations - Pascarelli predicts that Constellation Brands will report beer revenue and margins below the lower end of full-year guidance, which may negatively impact Street estimates [1]. - The analyst has reduced his first-quarter earnings per share (EPS) estimate to $3.20, and lowered fiscal year 2026 and fiscal year 2027 EPS estimates to $12.64 and $13.76, respectively [3][5]. - The price forecast of $195 implies a ~20% discount to the company's historical average multiple of ~14x [3]. Group 2: Market Trends and Challenges - Over the past three months, beer volumes have declined sequentially, with a forecasted beer depletion of -3.0%, which is 120 basis points below the -1.8% consensus [2][4]. - Volume trends have weakened since February due to category softness, ongoing consumer challenges, and poor weather in May and early June [3]. - Increased investment spending, particularly in marketing (estimated at 9.5% of sales), along with volume pressure, contributes to a forecasted beer margin of 38.0%, notably below the Street's 39.8% [4]. Group 3: Segment Performance and Guidance - Pascarelli is 10 points below consensus on wine and spirits revenue, expecting a ~30% organic decline, with the Svedka divestiture contributing to a ~5-point hit [5]. - The analyst models a 70% drop in segment operating income due to volume deleverage and distributor repayments [5]. - Despite a weak start to fiscal year 2026, the initial beer guidance was conservative enough to allow the company to meet its full-year targets, with management typically avoiding guidance revisions in the first quarter [6].

Core Viewpoint - Constellation Brands, Inc. (NYSE: STZ) is expected to report its Q1'26 results on July 1, with no anticipation of exceptional performance in the operating results [1] Company Performance Expectations - The focus is on the company's operating performance for the upcoming quarter, with an emphasis on maintaining a long-term investment perspective [1]

Core Viewpoint - Wall Street anticipates a year-over-year decline in earnings for Constellation Brands due to lower revenues, with actual results being crucial for near-term stock price movements [1][2]. Earnings Expectations - The upcoming earnings report is expected to show quarterly earnings of $3.39 per share, reflecting a -5% change year-over-year, and revenues of $2.58 billion, down 3.2% from the previous year [3]. - The consensus EPS estimate has been revised 0.15% lower in the last 30 days, indicating a bearish sentiment among analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that the Most Accurate Estimate for Constellation Brands is lower than the consensus estimate, resulting in an Earnings ESP of -2.69%, which complicates predictions of an earnings beat [12]. - A positive Earnings ESP is generally a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1, 2, or 3 [10]. Historical Performance - In the last reported quarter, Constellation Brands exceeded the expected earnings of $2.28 per share by delivering $2.63, resulting in a surprise of +15.35% [13]. - Over the past four quarters, the company has beaten consensus EPS estimates three times [14]. Conclusion - Constellation Brands does not currently appear to be a compelling candidate for an earnings beat, and investors should consider other factors when making decisions regarding the stock ahead of the earnings release [17].

Core Insights - Constellation Brands and Anheuser-Busch InBev are both major players in the alcoholic beverage industry, with Constellation focusing on higher-end products and Anheuser-Busch having a more global presence [1][2]. Constellation Brands - Constellation Brands generated $8.5 billion in sales for the fiscal year ending February 28, with 84% coming from beer products [4]. - The company is divesting lower-priced wine brands to focus on higher-margin premium wines, with the beer division showing a 39.7% operating margin compared to 19.5% for wine and spirits [5]. - Despite these strategic moves, fourth-quarter sales only increased by 1% to $2.2 billion, although operating income grew by 6% due to cost-cutting measures [6]. - The medium-term sales outlook has been lowered to an annual growth of 2% to 4%, down from 6% to 8%, indicating potential challenges ahead [7]. Anheuser-Busch InBev - Anheuser-Busch InBev reported $59.8 billion in revenue, with 88% derived from beer, and 76.5% of revenue coming from outside North America, providing greater geographic diversification [8]. - The company is less affected by tariffs due to its local production strategy, which helps mitigate cost increases [9]. - However, Anheuser-Busch has also faced sluggish growth, with a revenue increase of only 0.6% last year and a first-quarter sales growth of 1.5% [10]. Market Performance - Over the past year, Constellation Brands' share price decreased by 34.5%, while Anheuser-Busch's increased by 15.6%, contrasting with a 10.5% rise in the S&P 500 index [10]. - Despite Anheuser-Busch's advantages, both companies are currently not producing meaningful sales growth, leading to a recommendation to avoid investing in either stock at this time [11].

Core Insights - Constellation Brands has faced significant challenges over the past five years, resulting in an 8% decline in stock value while the S&P 500 rose by 86% [1] - The company generates the majority of its revenue from its beer business, which has seen a shift in revenue distribution from 67.3% in fiscal 2020 to 83.7% in fiscal 2025 [4][6] - Analysts predict a decline in revenue from $10.2 billion in fiscal 2025 to $9.9 billion by fiscal 2028, but expect profitability to return in fiscal 2026 [13] Business Performance - In fiscal 2025, Constellation's revenue breakdown was 83.7% from beer, 14.2% from wine, and 2.1% from spirits, indicating a significant shift towards beer [4] - Revenue growth from beer has decelerated, with a 5% growth rate in fiscal 2025 compared to 11% in the previous two years [5][7] - The wine and spirits segments have experienced declining revenues, with wine revenue decreasing by 7% and spirits by 11% in fiscal 2025 [5][10] Strategic Moves - The company has divested lower-margin wine and spirits brands to focus on premium offerings, which has impacted overall revenue [6] - Management plans to continue pruning its wine and spirits portfolio to strengthen higher-margin brands [10] - Constellation is exploring options to mitigate tariff impacts, including potentially increasing prices, although demand among younger consumers may limit pricing power [12] Future Outlook - Analysts expect a compound annual growth rate of 7% in EPS from fiscal 2026 to fiscal 2028, with profitability anticipated to return in fiscal 2026 [13][14] - If the company can navigate tariff challenges and refine its product portfolio, stock prices could rise by approximately 45% over the next five years [14] - Despite potential gains, Constellation may still underperform compared to other consumer staples and the S&P 500 [15]

Core Viewpoint - Constellation Brands is facing challenges in the beverage alcohol sector, leading to a more conservative outlook for fiscal years 2026 and beyond [5]. Group 1: Company Overview - Constellation Brands is a leading international producer and marketer of beer, wine, and spirits, primarily operating in the United States and Mexico [1]. - The company generates approximately $10 billion in annual revenues and holds the number one beer brand in the U.S., Modelo, along with other notable brands like Corona and Pacifico [1]. Group 2: Market Trends - The start of the calendar year has been more challenging than anticipated for the beverage alcohol industry, prompting a reassessment of market trends and future outlooks [5]. - Current consumer-level challenges are impacting the overall performance and expectations for the company [6].

Core Insights - Constellation Brands, Inc. (STZ) has experienced a significant decline in its stock price, dropping 26.5% over the past six months, contrasting with a 2.5% and 2.8% increase in the industry and Consumer Staples sector, respectively [1] - The company's beer sales growth outlook has been revised downward from 7%-9% to 2%-4% for fiscal years 2027 and 2028 due to weakening demand and macroeconomic challenges [10] Stock Performance - STZ is currently trading below its 50-day and 200-day moving averages, indicating potential weakness in momentum [3] - The stock's underperformance is attributed to declining beer demand and broader macroeconomic headwinds [7] Factors Behind Stock Decline - The core beer business, traditionally a strong growth driver, is facing decelerating depletion trends, particularly for key brands like Modelo and Corona, due to cautious spending among Hispanic consumers [9] - Rising input costs, particularly from tariffs on aluminum cans, inflation, and moderated volume growth have raised concerns about margin sustainability [11] Growth Strategies - Despite current challenges, STZ's focus on premiumization is driving growth in its Wine and Spirits segment, with key brands like The Prisoner, Kim Crawford, and Meiomi [12] - The company plans to invest nearly $2 billion from fiscal 2026 to 2028 to expand its Veracruz brewery and increase capacity from 48 million hectoliters to 55 million hectoliters by fiscal 2028 [13] Earnings Estimates - The Zacks Consensus Estimate for fiscal 2026 earnings per share (EPS) has been revised down by 0.9% to $12.74, indicating a year-over-year decline of 7.6% [14]

Core Insights - Constellation Brands, Inc. (STZ) is successfully implementing a premiumization strategy, leading to accelerated growth in its Power Brands, particularly in the beer segment [1] Group 1: Divestiture and Portfolio Restructuring - The company has completed the divestiture of its mainstream wine brands to The Wine Group, which includes brands like Woodbridge, Meiomi, and Robert Mondavi Private Selection [2][9] - The wine portfolio now focuses on exclusive wines priced at $15 and above, featuring renowned brands from top regions globally [3] - The craft spirits portfolio includes High West whiskey, Mi CAMPO tequila, and Casa Noble tequila, aligning with consumer-led premiumization trends [4] Group 2: Financial Outlook - For fiscal 2026, Constellation Brands anticipates net sales growth of 0-3% in the beer segment and a significant increase in enterprise operating income by 765-783% [5] - The medium-term outlook for fiscal 2027 and 2028 includes enterprise net sales growth of 2-4%, with operating income margins projected at 35-36% overall [6] - Earnings per share (EPS) growth is expected to be mid-single-digit to low-double-digit for fiscal 2027 and low-single-digit to mid-single-digit for fiscal 2028 [7] Group 3: Capacity Expansion and Market Position - The company is investing in capacity expansion in Mexico to meet demand for its high-end Mexican beer portfolio, aiming for a capacity of approximately 55 million hectoliters by fiscal 2028 [8] - Constellation Brands is focused on enhancing distribution and innovation to support its leading position in the beer market [8] Group 4: Challenges - The company faces challenges from rising selling, general, and administrative costs, as well as inflationary pressures affecting packaging and raw material costs [10]