Core Viewpoint - Constellation Brands, Inc. is expected to report declines in both revenue and earnings for the third quarter of fiscal 2026, with earnings estimated at $2.66 per share, reflecting an 18.2% decrease year-over-year, and revenues projected at $2.2 billion, indicating an 11.6% decline from the previous year [1][2]. Financial Performance Expectations - The Zacks Consensus Estimate for earnings is $2.66 per share, down 18.2% from the same quarter last year [2]. - Revenue expectations are set at $2.2 billion, which is an 11.6% decline compared to the prior-year quarter [2]. - In the last reported quarter, the company achieved an earnings surprise of 7.7%, with an average earnings beat of 4.2% over the last four quarters [3]. Earnings Prediction Model - The current model does not predict an earnings beat for Constellation Brands, as it holds a Zacks Rank of 4 (Sell) and an Earnings ESP of +3.58% [4]. Key Factors Impacting Q3 Results - The anticipated results are influenced by sluggish performance in the wine and spirits segment due to decreased shipment volumes, affected by the SVEDKA and 2025 Wine divestitures, as well as changes in distributor contractual obligations [5]. - Increased costs from packaging and raw materials due to inflation, along with higher depreciation and operating costs from brewery expansions, are expected to negatively impact operating income [6]. Strategic Initiatives - The company is progressing with capacity expansion plans in Mexico to meet demand for its high-end Mexican beer portfolio, including hard seltzers [7]. - Constellation Brands is focusing on premiumization, successfully transitioning its portfolio towards higher-end brands that align with consumer trends, with key growth drivers being its high-end Power Brands [8]. Valuation Insights - Constellation Brands is currently trading at a forward 12-month price-to-earnings ratio of 11.22X, which is below its five-year high of 23.57X and the industry average of 15.11X, indicating an attractive investment opportunity despite expected near-term declines [9][10]. - The stock has underperformed recently, losing 2.9% over the past three months compared to the industry’s growth of 1.9% [11].

Core Viewpoint - Constellation Brands is expected to report a decline in quarterly earnings while revenue is projected to increase slightly compared to the previous year [1] Group 1: Earnings and Revenue Expectations - The company will release its third-quarter earnings results on January 7, 2025, after the market closes [1] - Analysts predict earnings of $2.64 per share, down from $3.25 per share in the same quarter last year [1] - The consensus estimate for quarterly revenue is $2.16 billion, an increase from $2.46 billion a year earlier [1] Group 2: Analyst Ratings and Price Target - Jefferies analyst Kaumil Gajrawala downgraded Constellation Brands from Buy to Hold and reduced the price target from $170 to $154 [2] Group 3: Dividend Information - Constellation Brands currently offers an annual dividend yield of 2.96%, translating to a quarterly dividend of $1.02 per share, or $4.08 annually [2] - To achieve a monthly income of $500 from dividends, an investment of approximately $202,939 or around 1,471 shares is required [3] - For a more modest monthly income of $100, an investment of $40,560 or around 294 shares is needed [3] Group 4: Dividend Yield Calculation - The dividend yield is calculated by dividing the annual dividend payment by the stock's current price [4] - Changes in stock price directly affect the dividend yield; for instance, if the stock price increases, the yield decreases, and vice versa [4][5] - If a company increases its dividend while the stock price remains constant, the yield will increase [5] Group 5: Current Stock Performance - As of the latest publication, Constellation Brands shares were up 0.26% at $138.31 [5]

Core Viewpoint - Constellation Brands is expected to report a significant decline in quarterly earnings and revenues, with earnings per share projected at $2.66, down 18.2% year-over-year, and revenues forecasted at $2.18 billion, reflecting an 11.6% decrease [1]. Earnings Estimates - There has been no revision in the consensus EPS estimate for the quarter over the last 30 days, indicating that analysts have maintained their initial forecasts [2]. - Changes in earnings projections are crucial for predicting investor reactions, as empirical studies show a strong correlation between earnings estimate trends and short-term stock price movements [3]. Key Metrics Projections - Analysts estimate 'Net Sales- Wine and Spirits' to be $170.25 million, representing a decline of 60.5% from the previous year [5]. - The consensus for 'Net Sales- Beer' is projected at $2.01 billion, indicating a slight decrease of 1% year-over-year [5]. - 'Operating Income- Wine and Spirits' is expected to be $10.85 million, a significant drop from $95.20 million in the same quarter last year [6]. - 'Operating Income- Beer' is projected to reach $729.44 million, down from $769.90 million year-over-year [6]. Stock Performance - Constellation Brands shares have increased by 1.7% over the past month, outperforming the Zacks S&P 500 composite, which rose by 0.8% [6]. - The company holds a Zacks Rank of 4 (Sell), suggesting it is expected to underperform the overall market in the near term [6].

Core Viewpoint - The market anticipates a year-over-year decline in earnings for Constellation Brands due to lower revenues, with actual results being crucial for stock price movement [1][2]. Earnings Expectations - Constellation Brands is expected to report quarterly earnings of $2.66 per share, reflecting an 18.2% decrease year-over-year, and revenues are projected to be $2.18 billion, down 11.6% from the previous year [3]. Estimate Revisions - The consensus EPS estimate has remained unchanged over the last 30 days, indicating a stable outlook from covering analysts [4]. Earnings Surprise Prediction - The Most Accurate Estimate for Constellation Brands is higher than the Zacks Consensus Estimate, resulting in an Earnings ESP of +3.58%, suggesting a recent bullish sentiment among analysts [12]. Historical Performance - In the last reported quarter, Constellation Brands exceeded the expected earnings of $3.37 per share by delivering $3.63, achieving a surprise of +7.72% [13]. Over the past four quarters, the company has beaten consensus EPS estimates twice [14]. Overall Assessment - Despite a positive Earnings ESP, the stock carries a Zacks Rank of 4, making it challenging to predict an earnings beat conclusively [12]. An earnings beat or miss may not solely dictate stock movement, as other factors can influence investor sentiment [15].

Earnings Reports - Next Wednesday will see a notable increase in earnings, with nine companies reporting [1] - Key reports include Constellation Brands Inc., a consumer staples giant, and Jefferies Financial Group Inc., a financials firm, both reporting after market close [1] - Albertsons Companies Inc. Class A leads a group of retail and industrial companies reporting pre-market on Wednesday, which includes MSC Industrial Direct Company Inc., Cal-Maine Foods Inc., Unifirst Corporation, and AZZ Inc. [1] - AAR Corp. and technology companies Penguin Solutions Inc. and Applied Digital Corp. are set to report after market close on Tuesday and Wednesday, respectively [1]

Group 1 - The article provides a market analysis focusing on Constellation Brands Inc Class A and Molson Coors Brewing Co Class B, highlighting their performance and market trends [1] Group 2 - Constellation Brands has shown significant growth in its premium beer segment, contributing to an increase in overall revenue [1] - Molson Coors Brewing has been adapting its product offerings to meet changing consumer preferences, which has impacted its market share [1]

Summary of U.S. Consumer Strategy & Quantitative Research Webinar Industry Overview - The focus is on the U.S. Consumer sector, specifically Consumer Discretionary and Consumer Staples, which have underperformed the market by low double-digit percentages year-to-date in 2025 [3][18]. Core Insights and Arguments - **Market Performance**: 2025 has been challenging for the Consumer sector, with both Discretionary and Staples underperforming. Consumer Staples are now seen as attractive due to favorable price-to-forward earnings valuation multiples [3][31]. - **Sector Dynamics**: There is a contrasting performance between Consumer Staples and technology sectors, raising concerns about a potential tech bubble. Economic factors such as cutbacks in healthcare and SNAP benefits for low-income consumers, alongside inflation, could lead to an economic slowdown [4][19]. - **Investment Recommendations**: Focus on Consumer stocks that are: 1. More international 2. Exposed to higher-income consumers 3. Defensive in nature 4. Not facing idiosyncratic pressures that are not fully priced in [3][22]. - **Key Themes**: Tariff volatility, GLP-1 drug uptake, and consumer bifurcation are critical themes to monitor. Lower-income households are pressured by cutbacks, while higher-income households may benefit from upcoming tax breaks [5][20]. Subsector Recommendations - **Consumer Staples**: Emphasis on companies with international exposure in Soft Beverages and Household & Personal Care, as well as defensive Broadline Retailers. Caution is advised around companies negatively impacted by GLP-1 drug uptake [6][22]. - **Consumer Discretionary**: Focus on higher-quality names with reliable earnings performance. Caution is advised for those without a quality bias, although companies catering to higher-income consumers may benefit from tax breaks in 2026 [6][22]. Performance Metrics - **Consumer Discretionary**: - Best performers include Casinos (23.7%), Apparel Retail (22.7%), and Automotive Retail (19.1%). Weakest sectors include Textiles, Apparel, and Luxury Goods (2.1%) [27][28]. - **Consumer Staples**: - Dollar Stores (49.5%) and Tobacco (29.8%) are leading, while Food Producers (-7.3%) and Alcoholic Beverages (-28.6%) are lagging [29][30]. Valuation Insights - **Valuation Multiples**: Discretionary multiples are about 10% cheaper than historical averages, while Staples are in line with historical averages despite underperformance [31][32]. - **Stock Performance Drivers**: In 2025, multiple expansion has driven stock performance more than earnings growth in both sectors [44]. Earnings Revisions - **Sales Expectations**: Remained stable across consumer discretionary sectors, while earnings per share revisions have shown significant dispersion, particularly declining in textiles and luxury goods due to tariff impacts [51][52]. Conclusion - The current environment is characterized by significant sector rotation and stock-picking opportunities. Analysts recommend focusing on high-quality, defensive stocks with international exposure as the market navigates through economic uncertainties and potential sector shifts [21][22].

Core Viewpoint - Constellation Brands is currently undervalued in the market due to recent declines in consumer spending, presenting a unique opportunity for investors to acquire the stock at a high dividend yield and low free cash flow multiple [1] Sales Performance - The company experienced a 15% year-over-year decline in sales last quarter, primarily due to asset sales in the wine and spirits segment, while the beer segment, which constitutes 94% of total net sales, saw an adjusted sales decrease of 7% year over year [3] - Recent sales pressure is linked to cautious consumer spending, indicating a temporary dip rather than a permanent decline in brand positioning [5] Market Trends - Imported beer is gaining traction in the U.S. market, with nearly 18% of all beer consumed being imported, benefiting Constellation's portfolio that includes popular brands like Corona and Modelo [4] - The company's top beer brands gained dollar share in the U.S. market last quarter, with Modelo Especial leading in dollar sales [6] Financial Metrics - Despite lower sales, the company generated $634 million in free cash flow last quarter and over $1.8 billion on a trailing-12-month basis, allowing for an attractive price-to-free-cash-flow multiple of 13.8, significantly below the five-year average of 25 [8] - The dividend payout ratio was only 39% of free cash flow over the last year, with a current quarterly payment of $1.02, resulting in a forward dividend yield of 2.88%, more than double the S&P 500 average [9] Investment Opportunity - The current cyclical downturn presents a rare buying opportunity for investors to acquire a high-quality company at a bargain price, as such valuations are typically not available during periods of sales growth [10]

Group 1 - Constellation Brands and PepsiCo are considered stable blue chip stocks for conservative investors, with Constellation being a major producer of alcoholic beverages and PepsiCo a leading beverage maker with strong packaged food brands [1] - Over the past two years, Constellation's stock has dropped over 40%, while PepsiCo's stock has decreased by 10%, contrasting with the S&P 500's rally of more than 40% during the same period [2] - Constellation faces significant challenges, including a decline in beer consumption among younger Americans and reduced spending from Hispanic consumers, which has negatively impacted its revenue [5][6] Group 2 - For fiscal 2026, Constellation anticipates a decline in beer sales by 2%-4%, a drop in wine and spirits sales by 17%-20%, and an overall organic sales dip of 4%-6%, with analysts projecting an 11% revenue decline and a 4% drop in adjusted EPS [7] - Analysts expect revenue to remain flat for fiscal 2027, but adjusted EPS may rise by 8% as the company restructures its weaker business segments [8] - Constellation's stock is currently priced at $140, which may appear cheap at ten times next year's earnings, and it offers a forward dividend yield of 2.9%, but a higher valuation is unlikely until the beer business stabilizes [8]

Core Viewpoint - Constellation Brands, Inc. is expected to report a decline in earnings for the fiscal third quarter of 2026, reflecting ongoing challenges in consumer demand and margin pressures [2][5]. Financial Performance - Analysts anticipate a profit of $2.66 per share for the upcoming quarter, which represents an 18.2% decrease from $3.25 per share in the same quarter last year [2]. - For the full fiscal year, the expected EPS is $11.50, down 16.6% from $13.78 in fiscal 2025, but projected to rise by 8.3% to $12.45 in fiscal 2027 [3]. Stock Performance - STZ stock has underperformed significantly, with a 40.1% decline over the past 52 weeks, contrasting with the S&P 500 Index's 11.1% gains [4]. - The stock also underperformed compared to the Consumer Staples Select Sector SPDR Fund, which saw a 2.2% loss during the same period [4]. Market Sentiment - Analysts maintain a "Moderate Buy" rating for STZ, with 10 out of 24 analysts recommending a "Strong Buy" and an average price target of $169.18, indicating a potential upside of 21.1% from current levels [7]. - The company expresses cautious optimism regarding future growth despite the volatility in consumer demand and mixed market results [5].