Market Overview - The stock market experienced mixed results on the first trading day of July, with the S&P 500 and Nasdaq declining by -0.11% and -0.82% respectively, while the Dow and Russell 2000 increased by +0.91% and +0.94% respectively [1] - A rotation occurred in the market, with tech stocks lagging after a strong first half of 2025, while healthcare stocks led, exemplified by Amgen (AMGN) gaining +4% and Merck (MRK) up +3.4% [2] Economic Indicators - The Job Openings and Labor Turnover Survey (JOLTS) for May reported 7.8 million job openings, exceeding expectations of 7.3 million, with job quits at 3.3 million and layoffs/discharges at 1.6 million [4] - The highest job openings were in Accommodation/Food Service (+314K) and Finance/Insurance (+91K), while the Federal Government saw a decrease of -39K jobs [5] - Manufacturing data showed stronger than expected results, with S&P final Manufacturing PMI at 52.9 and ISM Manufacturing at 49.0%, while Construction Spending for May fell to -0.3% [6] Company Performance - Constellation Brands (STZ) reported Q1 earnings of $3.22 per share on revenues of $2.52 billion, missing estimates of $3.38 per share and $2.57 billion, attributed to softer consumer demand in wine and beer sales, with shares down -24% year to date [7]

Core Insights - Constellation Brands reported a revenue of $2.52 billion for the quarter ended May 2025, reflecting a year-over-year decline of 5.5% and an EPS of $3.22, down from $3.57 a year ago [1] - The reported revenue fell short of the Zacks Consensus Estimate of $2.57 billion, resulting in a surprise of -2.07%, while the EPS also missed the consensus estimate of $3.34 by -3.59% [1] Financial Performance Metrics - Net Sales for Wine and Spirits were reported at $280.5 million, significantly below the five-analyst average estimate of $297.74 million, marking a year-over-year decline of 27.9% [4] - Net Sales for Beer were $2.23 billion, slightly below the $2.27 billion average estimate, with a year-over-year change of -1.7% [4] - Operating Income for Wine and Spirits was reported at -$6 million, contrasting with the four-analyst average estimate of $12.38 million [4] - Operating Income for Beer was $873.4 million, compared to the average estimate of $899.7 million [4] - Operating Income for Corporate Operations and Other was -$57.5 million, slightly better than the average estimate of -$63.99 million [4] Stock Performance - Shares of Constellation Brands have returned -6.6% over the past month, while the Zacks S&P 500 composite has seen a +5.2% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Financial Performance - The company updated its FY26 reported EPS outlook to $1207-$1237 and maintained a comparable EPS outlook of $1260-$1290[15] - The company maintained FY26 targets for operating cash flow of $27 billion to $28 billion and free cash flow of $15 billion to $16 billion[15] - The company reported a low-single-digit net sales decline and a mid-single-digit operating income decline[15] - The company's operating margin contracted by 150 bps year-over-year to 391%[15] Beer Business - Beer Business shipments decreased by 33% and depletions decreased by 26%[19] - Beer Business net sales decreased by 2% to $22345 million, and operating income decreased by 5% to $8734 million[19] - The company achieved over $40 million of a net benefit through supply chain efficiency initiatives in Q1 FY26[18] Wine and Spirits Business - Wine and Spirits Business experienced a double-digit organic net sales decline and a triple-digit operating income decline[16] - Wine and Spirits Business operating margin contracted from 153% to (21%)[16] - Wine and Spirits Business organic net sales are expected to decline 17-20% and organic operating income to decline 97-100% in FY26[16] Capital Allocation - The company maintained its net leverage ratio at a target of approximately 30X[16, 18] - The company executed $381 million of share repurchases through June 2025[16] - Capital expenditures totaled $193 million, primarily focused on Beer brewing capacity additions[16]

Financial Performance - Constellation Brands reported quarterly earnings of $3.22 per share, missing the Zacks Consensus Estimate of $3.34 per share, and down from $3.57 per share a year ago, representing an earnings surprise of -3.59% [1] - The company posted revenues of $2.52 billion for the quarter ended May 2025, missing the Zacks Consensus Estimate by 2.07%, and down from $2.66 billion year-over-year [2] - Over the last four quarters, Constellation Brands has surpassed consensus EPS estimates two times and topped consensus revenue estimates just once [2] Stock Performance - Constellation Brands shares have lost approximately 26.4% since the beginning of the year, contrasting with the S&P 500's gain of 5.5% [3] - The current status of estimate revisions translates into a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the coming quarter is $4.07 on revenues of $2.68 billion, and for the current fiscal year, it is $12.68 on revenues of $9.44 billion [7] - The outlook for the Beverages - Alcohol industry is positive, currently ranking in the top 32% of over 250 Zacks industries, suggesting that stocks in the top 50% outperform those in the bottom 50% by more than 2 to 1 [8]

Core Insights - Constellation Brands reported fiscal first-quarter results that did not meet analysts' expectations, indicating weak consumer demand as a significant factor [1][2] - The company generated revenue of $2.52 billion, a decrease of 6% year-over-year, and adjusted earnings fell to $572.9 million, or $3.22 per share, down from $654.5 million, or $3.57 per share, in the same quarter last year [1][2] Financial Performance - Revenue for the quarter was $2.52 billion, slightly below analyst consensus [1] - Adjusted earnings were $572.9 million, or $3.22 per share, which also fell short of estimates [1] - The company maintained its full-year earnings estimate of $12.60 to $12.90 per share, with Wall Street analysts expecting $12.84 [2] Market Reaction - Following the earnings report, Constellation's shares declined by less than 1% in extended trading [2] - The stock has experienced a nearly 25% decline in value throughout 2025 up to the close of Tuesday [2]

Core Viewpoint - Constellation Brands reported quarterly earnings and revenue that fell short of analysts' expectations, primarily due to the impact of tariffs on aluminum, yet the company remains confident in its fiscal 2026 forecast despite these challenges [1][2]. Financial Performance - The company reported a fiscal first-quarter net income of $516.1 million, or $2.90 per share, a decrease from $877 million, or $4.78 per share, a year earlier [3]. - Adjusted earnings per share were $3.22, slightly below the expected $3.31, while net sales dropped 5.8% to $2.52 billion, compared to the expected $2.55 billion [6]. Impact of Tariffs - The report reflects the beginning of President Trump's tariffs on canned beer imports in early April, alongside increased trade duties on aluminum, which rose to 25% in mid-March and 50% in early June [4]. - Both imported beer and aluminum are vital to Constellation's beer business, which constitutes approximately 80% of the company's overall revenue [5]. Market Reaction - Following the earnings report, shares of Constellation Brands fell more than 1% in extended trading, with the stock having lost over 20% of its value this year due to concerns regarding the impact of higher tariffs on beer demand [2].

Company Continues to Proactively Address Consumer Demand Headwinds Largely Driven By the Current Socioeconomic Environment Through Consistent Execution of Strategic Objectives Beer Business Continues to Deliver Leading Share Gains in Category Across U.S. Tracked Channels as Incremental Marketing Investments Support Strong Brand Health Wine and Spirits Business Fully Focused on Higher-End Brands With Higher-Growth and Higher-Margins Following the Wine Divestiture Transaction That Closed in June Exhibit 99.1 ...

Core Insights - Constellation Brands, Inc. reported its first quarter fiscal 2026 financial results, with a conference call scheduled for July 2, 2025, to discuss these results and future outlook [1] Company Overview - Constellation Brands is a leading international producer and marketer of beer, wine, and spirits, with operations in the U.S., Mexico, New Zealand, and Italy [2] - The company's mission focuses on building beloved brands and enhancing human connections, which drives its growth as one of the fastest-growing large consumer packaged goods companies in the U.S. [2] Product Portfolio - The company offers a diverse range of products, including high-end imported beers like Corona Extra and Modelo Especial, a variety of wines such as The Prisoner Wine Company and Robert Mondavi Winery, and craft spirits like Casa Noble Tequila and High West Whiskey [3] Sustainability and ESG Strategy - Constellation Brands emphasizes sustainable and responsible operations, integrating its Environmental, Social, and Governance (ESG) strategy into its business practices [4] - The company aims to be a good steward of the environment, invest in communities, and promote responsible alcohol consumption, aligning these goals with its long-term business strategy [4]

Core Viewpoint - Constellation Brands, Inc. is expected to report declines in both revenue and earnings for the first quarter of fiscal 2026, with earnings estimated at $3.34 per share, reflecting a 6.4% decrease year-over-year, and revenues projected at $2.6 billion, indicating a 3.5% decline from the previous year [1][2]. Financial Performance Expectations - The Zacks Consensus Estimate for earnings per share is $3.34, down 6.4% from the same quarter last year, with a 1.5% downward revision in the past week [2] - Revenue expectations are set at $2.6 billion, which is a 3.5% decline compared to the prior-year quarter [2] - The company experienced a negative earnings surprise of 15.4% in the last reported quarter, but has historically beaten estimates by an average of 5.2% over the last four quarters [2] Earnings Prediction Model - The current model does not predict an earnings beat for Constellation Brands, with an Earnings ESP of -1.64% and a Zacks Rank of 3 (Hold) [3] Segment Performance Insights - The beer segment is expected to show resilience, benefiting from cost-saving measures and efficiency initiatives, with growth driven by brands like Modelo Especial and Corona Extra [4] - The wine and spirits segment returned to growth in the fourth quarter of fiscal 2025, with expected sales growth supported by increased shipment volumes and a favorable product mix [5] - Premiumization strategies and capacity expansion in Mexico are contributing positively to the beer segment's performance [6] Market Environment and Challenges - The company faces inflationary pressures, including higher packaging and raw material costs, which are impacting margins [7] - The operating environment is challenging due to cautious consumer spending and potential tariff changes, which may further affect profitability [8] Valuation Perspective - Constellation Brands is trading at a forward price-to-earnings ratio of 12.38X, which is below its five-year high of 23.57X and the industry average of 15.27X, indicating an attractive investment opportunity [9][10] - The stock has declined by 37.1% over the past year, compared to an 8.8% decline in the industry [11]

Market Overview - The market has recovered most of its losses from earlier in the quarter, finishing strong despite initial turbulence caused by President Trump's trade policies [1][2] - The upcoming week is expected to be shortened, following a quarter that started poorly but ended on a high note, emphasizing the importance of maintaining a steady investment approach [2] Company Insights - Constellation Brands is expected to report disappointing earnings, reflecting broader challenges in the consumer packaged goods sector [4] - The company faces headwinds from the rise of GLP-1 weight loss drugs and increasing consumer preference for cannabis, which are negatively impacting alcohol sales [4] - Constellation Brands' sales are particularly affected by Trump's immigration policies, as approximately half of its beer sales come from Hispanic consumers who are now spending less due to concerns over employment [4] Economic Indicators - The Chicago Purchasing Managers' Index will be released, serving as a key indicator of the industrial economy's health, with potential implications for Federal Reserve interest rate decisions [3] - Mortgage application figures are anticipated, which have been described as a significant burden on the economy [5] - The labor report set to be released on Thursday is critical; weak data could lead to renewed criticism of Fed Chair Jerome Powell and raise the possibility of a rate cut in July [5]