Key Takeaways STZ posted Q3 EPS and sales above estimates, even as both declined year over year on weak consumer demand.STZ's beer business outpaced the industry, aided by strong Pacifico and Victoria growth.STZ generated strong cash flow, funding dividends, buybacks and heavy investment in Mexico beer operations.Constellation Brands, Inc. (STZ) reported third-quarter fiscal 2026 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. The company’s sales and earnings declined year ...

Core Viewpoint - Constellation Brands, Inc. is a significant player in the beverage industry, focusing on beer, wine, and spirits, with a diverse portfolio of well-known brands and a presence in multiple countries [1] Stock Performance - The average target price for Constellation Brands has increased slightly from $156.57 to $158, indicating a modest positive sentiment among analysts in the short term [2] - The current target price is lower than last year's $188.11, reflecting a more cautious outlook over the past year [2] Future Outlook - Despite challenges anticipated in 2025, Constellation Brands is focusing on cost-cutting and expects a resurgence in beer demand among Hispanic consumers [3] - Analyst Lauren Lieberman from Barclays has set a price target of $281, indicating optimism about the company's future performance [3] Earnings Report - The upcoming third-quarter earnings report is expected to show strong performance with a double-beat in revenue and earnings per share, which could positively influence analyst target prices and investor sentiment [4] Strategic Initiatives - Market trends and strategic initiatives, such as new product launches or partnerships, are crucial factors that could impact Constellation Brands' stock outlook as the company navigates its challenges [5]

Key Takeaways STZ is expected to post 3Q26 EPS of $2.66 and revenues of $2.2B, suggesting double-digit y/y declines.STZ faces pressure from weak wine and spirits shipments tied to divestitures and distributor contract changes.STZ invests in Mexico beer capacity and premium brands to drive long-term growth despite near-term costs.Constellation Brands, Inc. (STZ) is scheduled to release third-quarter fiscal 2026 results on Jan. 7, 2026. The alcoholic beverage bigwig is expected to have recorded declines in it ...

Core Viewpoint - Constellation Brands has experienced a decline in share price by approximately 7.8% since its last earnings report, raising questions about the potential for continued negative trends or a possible breakout before the next earnings release [1] Financial Performance - The company reported second-quarter fiscal 2026 results, with both sales and earnings surpassing the Zacks Consensus Estimate despite year-over-year declines due to weak consumer demand [2] - Comparable earnings per share (EPS) were $3.63, down 16% year over year, but exceeded the Zacks Consensus Estimate of $3.37. Reported EPS was $2.65, compared to a loss of $6.59 in the same quarter last year [3] - Net sales decreased by 15% year over year to $2.48 billion, slightly above the Zacks Consensus Estimate of $2.46 billion. Organic net sales fell by 8% year over year [3] Segment Performance - Sales in the beer segment fell 7% year over year to $2.35 billion, driven by an 8.7% decline in shipment volumes due to socioeconomic headwinds and distributor inventory rebalancing. Depletions decreased by 2.7%, with notable declines in Modelo Especial, Corona Extra, and Modelo Chelada brands, partially offset by growth in Pacifico and Victoria [4] - The wine and spirits segment saw a significant decline of 65% year over year in sales, dropping to $136 million, primarily due to a 76.4% decrease in shipment volumes linked to divestitures and changes in distributor obligations. However, depletions in this segment grew nearly 2% [5] Margin Analysis - Comparable operating income for the company was $886.2 million, down from $1,019.1 million in the prior-year quarter, attributed to weak performance across beer, wine, and spirits businesses [6] - The beer segment's operating income fell 12% year over year to $951.6 million, with an operating margin contraction of 200 basis points to 40.6%, influenced by higher costs of goods sold (COGS) and increased marketing expenses [7] - The wine and spirits segment reported an operating loss of $19.8 million, a significant decline from an operating income of $70.5 million in the previous year, with margins affected by divestitures and changes in distributor contractual obligations [8]

Core Insights - Constellation Brands, Inc. is facing challenges in the alcohol market, particularly due to the impact of GLP-1 drugs that reduce cravings for alcohol, affecting sales of its major brands like Corona and Modelo [1][2] - The company's stock has seen a decline, with a current valuation at 12 times earnings, which is noted as the lowest seen, although this multiple contraction is considered justified given recent performance [1] Company Overview - Constellation Brands produces and markets a variety of alcoholic beverages, including beer, wine, and spirits, under well-known brands such as Corona, Modelo, Robert Mondavi, Kim Crawford, and SVEDKA [2] - The company has been described as a "fallen idol" in the consumer packaged goods sector, reflecting broader issues within the alcohol industry [2] Market Context - The alcohol industry is currently experiencing a downturn, with Constellation Brands exemplifying the struggles faced by companies in this sector [2] - The introduction and popularity of GLP-1 drugs are significantly impacting consumer behavior, particularly in relation to alcohol consumption [2]

Core Insights - Constellation Brands, Inc. reported second-quarter fiscal 2026 results with both sales and earnings exceeding Zacks Consensus Estimates despite year-over-year declines due to weak consumer demand and socioeconomic challenges [1][2]. Financial Performance - Comparable earnings per share (EPS) were $3.63, a 16% decline year over year, but above the Zacks Consensus Estimate of $3.37. Reported EPS was $2.65 compared to a loss of $6.59 in the same quarter last year [2]. - Net sales decreased 15% year over year to $2.48 billion, surpassing the Zacks Consensus Estimate of $2.46 billion. Organic net sales fell 8% year over year [2]. - The stock price increased by 3.3% in after-market trading following the earnings release, reflecting better-than-expected performance [3]. Segment Performance - Beer segment sales declined 7% year over year to $2.35 billion, driven by an 8.7% drop in shipment volumes due to socioeconomic headwinds and distributor inventory rebalancing. Depletions fell 2.7%, with notable declines in Modelo Especial, Corona Extra, and Modelo Chelada brands, partially offset by growth in Pacifico and Victoria [4]. - Wine and spirits segment sales plummeted 65% year over year to $136 million, impacted by a 76.4% decline in shipment volumes due to divestitures and changes in distributor obligations, although depletions grew nearly 2% [5]. Margins and Operating Income - Comparable operating income was $886.2 million, down from $1,019.1 million in the prior-year quarter, attributed to weak performance in beer, wine, and spirits [6]. - Operating income for the beer segment fell 12% year over year to $951.6 million, with the operating margin contracting by 200 basis points to 40.6% due to higher costs and increased marketing expenses [7]. - The wine and spirits segment reported an operating loss of $19.8 million, a significant decline from an operating income of $70.5 million in the previous year, with margins affected by divestitures and contractual changes [8]. Financial Position and Cash Flow - As of August 31, 2025, cash and cash equivalents stood at $72 million, long-term debt was $9.8 billion, and total shareholders' equity was $7.5 billion. The company generated an operating cash flow of $1.5 billion and an adjusted free cash flow of $1.1 billion in Q2 FY26 [9]. - The company returned nearly $604 million to shareholders through buybacks and dividends, with a quarterly dividend of $1.02 per share announced [10]. Future Outlook - Constellation Brands forecasts operating cash flow of $2.5-$2.6 billion and free cash flow of $1.3-$1.4 billion for fiscal 2026, with planned capital expenditures of $1.2 billion [11]. - The company anticipates a decline in enterprise organic net sales of 4-6% and a decrease in beer segment net sales of 2-4%. The wine and spirits segment is expected to decline by 17-20% [12]. - Management projects a comparable EPS guidance of $11.30-$11.60 for fiscal 2026, with reported EPS expected to be $9.86-$10.16 [14].

Core Viewpoint - Constellation Brands reported disappointing Q1 fiscal 2026 results, with both sales and earnings missing estimates, primarily due to weak consumer demand influenced by socioeconomic factors [3][4]. Financial Performance - Comparable earnings per share (EPS) for Q1 were $3.22, down 10% year over year, missing the Zacks Consensus Estimate of $3.38. Reported EPS was $2.90, a 39% decline year over year [4]. - Net sales fell 5.5% year over year to $2.52 billion, also missing the Zacks Consensus Estimate of $2.57 billion [4]. - The beer segment's sales decreased 2% year over year to $2.23 billion, with a shipment volume decline of 3.3% [5]. - The wine and spirits segment saw a significant sales drop of 28% year over year to $280.5 million, driven by a 30.4% decline in shipment volumes [6]. Margin Analysis - Comparable operating income was $810 million, down 11% from the prior year, attributed to declines in both beer and wine & spirits segments [7]. - Operating income for the beer segment fell 5% year over year to $873.4 million, with an operating margin contraction of 150 basis points to 39.1% due to increased costs [8]. - The wine and spirits segment reported an operating loss of $6 million, a significant decline from an operating income of $59.7 million in the previous year [9]. Financial Position - As of May 31, 2025, cash and cash equivalents were $73.9 million, long-term debt was $9.8 billion, and total shareholders' equity was $7.3 billion [10]. - The company generated an operating cash flow of $637.2 million and an adjusted free cash flow of $444.4 million for Q1 [10][11]. Future Outlook - Constellation Brands forecasts operating cash flow of $2.7-$2.8 billion and free cash flow of $1.5-$1.6 billion for fiscal 2026, with planned capital expenditures of $1.2 billion [12]. - The company anticipates organic net sales for fiscal 2026 to range from a decline of 2% to an increase of 1%, with the beer segment expected to grow 0-3% and the wine and spirits segment to decline 17-20% [13]. - Comparable EPS guidance for fiscal 2026 is set at $12.60-$12.90, with reported EPS expected to be $12.07-$12.37 [15].

Core Insights - Constellation Brands, Inc. reported first-quarter fiscal 2026 results with both sales and earnings missing expectations, primarily due to weak consumer demand influenced by socioeconomic factors [1][2][3] Financial Performance - Comparable earnings per share (EPS) for the quarter were $3.22, a 10% decline year over year, missing the consensus estimate of $3.38. Reported EPS was $2.90, down 39% year over year [2][6] - Net sales decreased by 5.5% year over year to $2.52 billion, also falling short of the consensus estimate of $2.57 billion [2][6] - The beer segment's sales fell 2% year over year to $2.23 billion, with a 3.3% decline in shipment volume attributed to socioeconomic headwinds [4][6] - Wine and spirits sales plummeted 28% year over year to $280.5 million, driven by a 30.4% decline in shipment volumes and an 8.1% dip in depletions [7][6] Margin Analysis - Comparable operating income was $810 million, down 11% from the prior year, reflecting challenges in both beer and wine & spirits segments [8] - Operating income for the beer segment fell 5% year over year to $873.4 million, with operating margin contracting by 150 basis points to 39.1% due to increased costs [9] - The wine and spirits segment reported an operating loss of $6 million compared to an operating income of $59.7 million in the previous year, with significant margin contraction [10] Financial Position - As of May 31, 2025, the company had cash and cash equivalents of $73.9 million, long-term debt of $9.8 billion, and total shareholders' equity of $7.3 billion [11] - Operating cash flow for the first quarter was $637.2 million, with adjusted free cash flow at $444.4 million [11][12] Future Outlook - The company forecasts operating cash flow of $2.7-$2.8 billion and free cash flow of $1.5-$1.6 billion for fiscal 2026, with planned capital expenditures of $1.2 billion [13] - Management anticipates organic net sales for fiscal 2026 to range from a decline of 2% to an increase of 1%, with the wine and spirits segment expected to decline by 17-20% [14] - Comparable EPS guidance for fiscal 2026 is set at $12.60-$12.90, with reported EPS expected to be $12.07-$12.37 [16][17]