Constellation Brands (STZ) Moves Off Lows Into Earnings – What To Expect

Constellation Brands Inc. (NYSE: STZ), the beverage giant behind iconic brands like Corona and Modelo, finds itself at an interesting juncture as it heads into its next earnings cycle. Analysts project that STZ will report earnings per share (EPS) of $3.41 for the upcoming quarter, marking a notable decline from $4.32 in the same period last year. Revenue is expected to come in at $2.46 billion, representing a 15.8% year-over-year decrease in sales.

These projections suggest a challenging quarter ahead, with analysts likely to focus on the company’s guidance and underlying performance drivers to assess whether the slowdown is temporary or indicative of broader headwinds.

The Constellation Brands stock is currently priced close to $143, up 6.92% in the last five days. This uptick, however, occurs against a backdrop of downward revisions in analyst estimates and a stock price languishing below its key moving averages, leaving analysts to question whether this is a temporary reprieve or the start of a sustained recovery.

Roth Capital and other analyst firms have recently lowered their earnings projections for STZ. This adjustment typically reflects concerns about the company's near-term profitability and growth prospects. These revisions often stem from a multitude of factors including changing consumer preferences, increased competition, and macroeconomic headwinds.

Recent financial results offer a glimpse into the challenges and opportunities facing Constellation Brands. The company's fourth-quarter fiscal 2025 report revealed a mixed bag. While net sales edged up 1% year-over-year to $2.16 billion, surpassing analyst expectations, the bottom line told a different story.

Adjusted earnings per share (EPS) came in strong at $2.63, a 14% increase, but a reported net loss of $375.3 million, or $2.09 per share, was primarily attributed to a substantial non-cash goodwill impairment loss of $547.7 million within its wine and spirits segment.

A closer look at segment performance reveals further nuances. The beer segment, the company's cash cow, experienced relatively flat sales at $1.7 billion. While pricing adjustments helped offset a 1.8% decline in shipment volumes, depletion volumes also dipped by 1%. Within the beer portfolio, Modelo Especial and Corona Extra saw declines, while Pacifico enjoyed robust growth. The wine and spirits segment, on the other hand, showed promise with a 5% increase in sales, driven by shipment volume growth and a favorable product mix.

Looking ahead to fiscal 2026, Constellation Brands has adopted a cautious stance, projecting comparable EPS between $12.60 and $12.90, falling short of Wall Street's expectations. The company anticipates organic net sales to range from a 2% decline to a 1% increase.

This conservative outlook stems, in part, from the expected impact of new U.S. tariffs on imported canned beer and aluminum cans, which are poised to inflate the company's cost structure. In response, Constellation Brands intends to divest its remaining mainstream wine brands, focusing on higher-growth, premium segments.

In conclusion, Constellation Brands is at a crossroads. While challenges remain, the company's strategic initiatives and the strength of its core brands offer potential for long-term value creation. Let's see what the earnings call, and outlook have in store.