Constellation Brands(US:STZ) ZACKS·2026-01-08 16:31Core Insights - Constellation Brands, Inc. (STZ) reported third-quarter fiscal 2026 results with sales and earnings exceeding Zacks Consensus Estimates, despite year-over-year declines due to weak consumer demand trends [1][10] Financial Performance - Comparable earnings per share (EPS) for Q3 were $3.06, a 6% decline year over year, but above the Zacks Consensus Estimate of $2.65. Reported EPS was $2.88 compared to $3.39 in the same quarter last year [1] - Net sales decreased by 10% year over year to $2.22 billion, surpassing the Zacks Consensus Estimate of $2.18 billion. Organic net sales fell by 2% year over year [2] - The beer business generated $2.01 billion in sales, down 1% year over year, with a 2.2% decline in shipment volumes, partially offset by favorable pricing. Depletions fell by 3% [4] - The wine and spirits segment saw a significant decline of 51% in sales to $213.1 million, driven by a 70.6% drop in shipment volumes due to divestitures and strategic pricing efforts [5] Margin Analysis - Comparable loss for the company was $46.9 million, compared to a loss of $9.2 million in the prior-year quarter, attributed to weak operating income across beer, wine, and spirits businesses [6] - Operating income for the beer segment decreased by 1% to $763.5 million, with an operating margin increase of 10 basis points to 38% [7] - The wine and spirits segment reported an operating income of $33.7 million, down 65% from the previous year, with an operating margin contraction to 15.8% [8] Financial Position - As of November 30, 2025, cash and cash equivalents stood at $152.4 million, long-term debt at $10.3 billion, and total shareholders' equity at $7.7 billion. The company generated an operating cash flow of $2.1 billion and adjusted free cash flow of $1.5 billion in the first nine months of fiscal 2026 [11] - The board announced a quarterly dividend of $1.02 per share, payable on November 13, 2026, with nearly $604 million returned to shareholders through share repurchases [12] Future Outlook - The company forecasts an operating cash flow of $2.5-$2.6 billion and adjusted free cash flow of $1.3-$1.4 billion for fiscal 2026, with capital expenditures of $1.2 billion primarily for Mexico beer operations [13] - Management projects a 4-6% decrease in enterprise organic net sales for fiscal 2026, with beer segment net sales expected to decline by 2-4% and wine and spirits segment net sales anticipated to drop by 17-20% [14] - Comparable EPS guidance is set at $11.30-$11.60 for fiscal 2026, with a reported EPS expectation of $9.72-$10.02 [16]