Constellation Brands' CEO is "cautiously optimistic" on the business having "hit the bottom" when it comes to macro pressures that have affected its sales in recent months. In a call yesterday (7 October) following the release of the group's second quarter results, Deutsche Bank analyst Chris Barnes asked the group to detail expectations for its second half of the fiscal year. While CEO Bill Newlands said he couldn't give any predictions, he noted the group had "seen unprecedented volatility, and there's ...

In early July 2025, I had written my first analysis about the world's premier spirits company, Diageo (NYSE: DEO ). I rated the stock a "sell" due to ongoing operational headwinds, paired with a still extreme valuation, despite the stock having been cut inAlways on the hunt for undervalued, promising stocks with a focus on risk and reward. Limited risks and decent to high upside by knowing what one's owning. I strongly believe that the best investment ideas are often the simplest. If contrarian, the better. ...

Constellation Brands beating estimates climbing after uh reporting earnings. Our Brandon Gomez listened to this morning's conference call and he has some more color. Brandon, I guess it it could have been worse is what the market is saying.>> Hey Sarah. Yeah, good morning. Analyst Canadian SWAT at Bernstein winning best headline I will say this morning saying constellation is quote nicely clearing a low bar.Q2 EPS coming in at $363 a share revenue at nearly 2.5% billion both ahead of expectations but the Co ...

Financial Data and Key Metrics Changes - The company reported a decrease in top-line guidance while maintaining capital expenditure (CAPEX) guidance, indicating confidence in long-term growth despite near-term headwinds [12][14] - The beer operating margin target remains at 39% to 40%, which is considered best in class, even with some expected deleveraging [65][66] Business Line Data and Key Metrics Changes - The beer segment experienced a decline in sales volume, particularly among Hispanic consumers, attributed to macroeconomic factors and socio-economic concerns [9][10] - The wine and spirits segment showed positive growth, with brands like Kim Crawford and Meiomi contributing to a 2% increase in Q2, maintaining a strong market position [36][70] Market Data and Key Metrics Changes - The company noted significant volatility in sales, particularly in high Hispanic zip code areas, which have underperformed compared to the general market [76] - California has been identified as a major challenge, with expectations for construction opportunities to potentially improve beer sales in the region [77] Company Strategy and Development Direction - The company is focused on maintaining marketing investments to drive long-term growth, despite current economic challenges [25][26] - There is an emphasis on price pack architecture to cater to consumers with varying financial capabilities, ensuring accessibility to products across different price points [44][60] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about hitting the bottom of the current sales decline, while acknowledging unprecedented volatility in the market [76] - The company remains committed to investing in brand loyalty and marketing, particularly targeting younger consumers like Gen Z [10][25] Other Important Information - The company has achieved $105 million in cost savings year-to-date, with ongoing efforts to optimize operations and logistics [48] - Tariff impacts are expected to be around $70 million for the beer business and $20 million for the wine business, tracking with volume changes [53] Q&A Session Summary Question: Volume growth and consumer sentiment - Management highlighted that 80% of consumers are concerned about the socio-economic environment, impacting engagement and volume growth [9][10] Question: CAPEX guidance rationale - The company plans to maintain CAPEX to support long-term growth, despite short-term challenges [12][14] Question: Brand loyalty for Corona and Modelo - Management noted increased loyalty for Corona and Modelo, with specific brands within the portfolio performing well [18][19] Question: Impact of macro factors on beer category - Management believes macro factors are more significant than structural issues, although cannabis and health trends are acknowledged as potential influences [23][24] Question: Beer margin and cost savings - The company reported $65 million in cost savings for Q2, with ongoing initiatives to enhance operational efficiency [47][48] Question: Pricing strategy in light of economic challenges - The company expects to maintain a 1-2% pricing increase, adjusting strategies based on market conditions [72][73] Question: Inventory levels and destocking - Inventory levels are reported to be in a good position, with no significant destocking issues anticipated [70][71]

Financial Data and Key Metrics Changes - The company reported a decrease in top-line guidance while maintaining capital expenditure (CAPEX) guidance, indicating confidence in long-term growth despite near-term headwinds [12][14]. - The beer operating margin is expected to remain best in class, even with some deleveraging due to volume declines [65]. Business Line Data and Key Metrics Changes - The beer segment experienced a drop in sales volume, particularly among Hispanic consumers, attributed to macroeconomic factors and socio-economic concerns [9][10]. - The wine and spirits business showed positive growth, with key brands like Mi Campo and The Prisoner gaining market share [36][70]. Market Data and Key Metrics Changes - The company noted that Hispanic consumer sentiment has been particularly suppressed, impacting sales volume [8][9]. - The overall market for beer is facing challenges, with significant differences in performance across various demographic segments [76]. Company Strategy and Development Direction - The company is focusing on maintaining marketing investments to drive long-term growth, despite current economic challenges [26][60]. - There is an emphasis on price pack architecture to cater to consumers with varying financial capabilities, ensuring accessibility to products [44][60]. Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about hitting the bottom of the current sales volume decline, while acknowledging unprecedented volatility in the market [76]. - The company is committed to investing in long-term growth and believes that socio-economic conditions will eventually improve, allowing for a return to traditional growth profiles [26][67]. Other Important Information - The company has achieved significant cost savings, totaling over $500 million since the investor day a couple of years ago, with $105 million realized year-to-date [48]. - Tariff impacts are expected to be around $70 million for the beer business and $20 million for the wine business this year [53]. Q&A Session Summary Question: Impact of ICE activities on volume growth - Management indicated that consumer sentiment is a key factor, with 80% of consumers expressing concern about the socio-economic environment, which has affected engagement and volume growth [9][10]. Question: CAPEX guidance amidst weaker top line - Management stated that CAPEX guidance remains unchanged due to long-term growth commitments, although they are exploring ways to potentially reduce CAPEX in future years [12][14]. Question: Loyalty metrics for Corona and Modelo - Management highlighted increased loyalty for Corona and Modelo, despite recent challenges for Corona Extra, with strong performance from Corona Familiar and Sunbrew [18][19]. Question: Structural vs. cyclical factors affecting beer category - Management believes that cyclical factors are more significant than structural ones, although they acknowledge potential impacts from health trends and cannabis substitution [23][24]. Question: Beer margin and cost savings - The company reported $65 million in cost savings for Q2 and is focused on operational efficiencies to continue this trend [47][48]. Question: Brand positioning of Corona - Management is refining Corona's brand positioning to focus more on the beer itself and its refreshing qualities, moving away from celebrity-heavy marketing [54][55]. Question: Pricing strategy amidst economic challenges - The company expects to maintain a 1%-2% pricing increase, adjusting strategies based on market conditions and consumer sentiment [72][73]. Question: Depletions expectations for the second half - Management noted that depletions are expected to track closely with shipments, but there is caution due to unprecedented market volatility [76].

Financial Data and Key Metrics Changes - The company reported a decrease in top-line guidance last month but maintained its CAPEX guidance, indicating a commitment to long-term growth despite near-term headwinds [10][12] - The beer operating margin target remains at 39% to 40%, which is considered best in class, even with some deleveraging expected [58][60] Business Line Data and Key Metrics Changes - The beer segment experienced a drop in sales volume, particularly among Hispanic consumers, attributed to macroeconomic factors and socio-economic concerns [6][9] - The wine and spirits segment showed a 2% increase in Q2, driven by brands like Kim Crawford and Meiomi, indicating a strong performance in the market [32][64] Market Data and Key Metrics Changes - Consumer sentiment remains low, with 80% of surveyed consumers expressing concerns about the socio-economic environment, impacting overall sales volume [7][9] - The company noted significant differences in performance across various markets, with high Hispanic zip code areas showing worse results compared to the general market [69] Company Strategy and Development Direction - The company is focused on maintaining marketing investments to drive long-term growth, despite current economic challenges [22][23] - There is an emphasis on price pack architecture to cater to consumers with varying financial capabilities, ensuring accessibility to products [39][55] Management's Comments on Operating Environment and Future Outlook - Management believes that the current challenges are primarily cyclical and expects a return to traditional growth profiles as socio-economic conditions improve [23][60] - The company is cautiously optimistic about hitting the bottom of the current market volatility, with a focus on monitoring trends closely [70] Other Important Information - The company has achieved $105 million in cost savings year-to-date, with ongoing efforts to optimize operations and logistics [43] - Tariff impacts are expected to be around $70 million for the beer business and $20 million for the wine business this year [48] Q&A Session Summary Question: Volume growth and consumer sentiment - Management acknowledged the impact of socio-economic concerns on consumer behavior, particularly among Hispanic consumers, and noted increased loyalty for brands like Corona and Modelo [6][7] Question: CAPEX guidance rationale - The company explained that CAPEX for FY2026 remains unchanged due to long-term commitments, while future CAPEX adjustments will be considered based on market conditions [10][12] Question: Beer margin and cost savings - Management highlighted $65 million in cost savings for Q2 and discussed ongoing efforts to enhance operational efficiency [42][43] Question: Brand loyalty and performance - The company provided insights into brand health metrics, indicating that while Corona Extra faced challenges, the broader Corona family performed well, particularly with Corona Familiar [15][16] Question: Pricing strategy and market conditions - Management reiterated the expectation of a 1% to 2% pricing increase, emphasizing a market-by-market approach to pricing strategies [66][67] Question: Inventory levels and depletions - The company confirmed that inventory levels are in a good position and expressed confidence in aligning shipments and depletions moving forward [36][64]

October 6, 2025 SECOND QUARTER FISCAL YEAR 2026 Financial Results FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements that are based on certain assumptions, estimates, expectations, plans, timetables, analyses, and opinions made by management in light of their experience and perception of historical trends, current conditions, and expected future developments, as well as other factors management believes are appropriate in the circumstances. These forward-looking statements are ...

Core Insights - Constellation Brands reported revenue of $2.48 billion for the quarter ended August 2025, a decrease of 15% year-over-year, with EPS at $3.63 compared to $4.32 in the same quarter last year [1] - The revenue exceeded the Zacks Consensus Estimate of $2.46 billion by 0.98%, while the EPS surpassed the consensus estimate of $3.37 by 7.72% [1] Revenue and Earnings Performance - Net Sales for Wine and Spirits were reported at $136 million, below the five-analyst average estimate of $138.99 million, reflecting a significant year-over-year decline of 65% [4] - Net Sales for Beer reached $2.35 billion, slightly above the $2.33 billion average estimate, but still represented a year-over-year decrease of 7.3% [4] - Operating Income for Wine and Spirits was reported at -$19.8 million, worse than the estimated -$9.36 million [4] - Operating Income for Beer was $951.6 million, exceeding the average estimate of $911.22 million [4] - Corporate Operations and Other reported an Operating Income of -$45.6 million, better than the estimated -$53.47 million [4] Stock Performance - Shares of Constellation Brands have returned -4.2% over the past month, contrasting with the Zacks S&P 500 composite's increase of 4.3% [3] - The stock currently holds a Zacks Rank 5 (Strong Sell), indicating potential underperformance relative to the broader market in the near term [3]

Core Viewpoint - Constellation Brands Inc. reported quarterly results that exceeded expectations, leading to an increase in share prices after hours, while maintaining its full-year outlook [1] Financial Performance - The company’s quarterly results surpassed market expectations, indicating strong operational performance [1] - Management reaffirmed its full-year outlook, suggesting confidence in future performance despite market conditions [1]

Core Viewpoint - Constellation Brands experienced a smaller-than-expected decline in second-quarter sales, supported by consistent demand for beer despite challenges faced by key Hispanic consumers due to the Trump administration's immigration policies [1] Company Summary - The second-quarter sales drop was less severe than anticipated, indicating resilience in the company's performance [1] - Steady demand for beer has been a significant factor in mitigating the sales decline [1] Industry Summary - The impact of immigration policies on Hispanic consumers may pose challenges for the broader beverage industry, particularly for companies reliant on this demographic [1]