STZ Q4 Earnings & Sales Beat, Stock Dips 3.6% on Cautious FY26 View

Core Insights - Constellation Brands, Inc. reported fourth-quarter fiscal 2025 results with both sales and earnings exceeding Zacks Consensus Estimates, showing year-over-year improvement despite softer consumer demand [1][4] Financial Performance - Comparable EPS for the fourth quarter was $2.63, a 14% increase year over year, surpassing the Zacks Consensus Estimate of $2.28 [3] - Reported net sales rose 1% year over year to $2.16 billion, exceeding the Zacks Consensus Estimate of $2.13 billion [4] - The company incurred a reported loss of $2.09 per share, which included a non-cash goodwill impairment loss of $547.7 million for the wine and spirits business [3] Segment Performance - Beer segment sales were nearly flat at $1.7 billion, with a 1.8% decline in shipment volumes, partially offset by pricing [5] - Wine and spirits segment sales increased 5% year over year to $459.8 million, driven by a 3.5% rise in shipment volumes [7] - Comparable operating income was $659 million, up 6% from the prior year, with beer segment operating income improving 7% to $623.8 million [8][9] Financial Position - As of February 28, 2025, cash and cash equivalents were $68.1 million, long-term debt was $9.3 billion, and total shareholders' equity was $6.9 billion [11] - The company generated an operating cash flow of $3.2 billion and an adjusted free cash flow of $1.9 billion for fiscal 2025 [11] Dividend and Shareholder Returns - A quarterly dividend of $1.02 per share was announced, payable on May 15, 2025 [12] - The company returned nearly $1.9 billion to shareholders through share repurchases and dividends in fiscal 2025 [12] Future Outlook - For fiscal 2026, the company anticipates organic net sales to decline by 2% to increase by 1%, with a significant expected decline of 17-20% in the wine and spirits segment [14] - Comparable EPS guidance for fiscal 2026 is set at $12.60-$12.90, with reported EPS expected to be $12.33-$12.63 [16] - Operating cash flow is forecasted to be $2.7-$2.8 billion for fiscal 2026, with capital expenditures of $1.2 billion planned [18] Medium-Term Projections - For fiscal 2027 and 2028, the company expects enterprise net sales growth of 2-4%, with operating income margins projected at 35-36% [19] - EPS growth is anticipated to be mid-single-digit to low-double-digit for fiscal 2027 and low-single-digit to mid-single-digit for fiscal 2028 [21]