Constellation Brands (STZ) Down 3.8% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Constellation Brands (STZ). Shares have lost about 3.8% in that time frame, underperforming the S&P 500. Will the recent negative trend continue leading up to its next earnings release, or is Constellation Brands due for a breakout? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent drivers for Constellation Brands Inc before we dive into how investors and analysts have reacted as of late. Constellation Brands' Q1 Earnings Beat Estimates Constellation Brands reported first-quarter fiscal 2027 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. The company's sales declined year over year, but earnings improved from the year-ago period. Comparable earnings per share (EPS) of $3.43 rose 7% year over year in the fiscal first quarter and surpassed the Zacks Consensus Estimate of $3.22. On a reported basis, the company's EPS was $3.79 compared with $3.43 reported in the year-earlier quarter. Net sales declined 3% year over year to $2.433 billion but surpassed the Zacks Consensus Estimate of $2.404 billion. Organic net sales increased 3% year over year. STZ's Q1 Performance Details Constellation Brands' sales for the beer business jumped nearly 2% year over year to $2.28 billion, backed by a rise of 1.8% in shipment volumes and favorable pricing. Depletions fell 0.3% as declines for Modelo Especial of just 2% and Corona Extra of about 5% were more than offset by increases from Pacifico, Victoria and the Modelo Chelada brands of nearly 21%, 14% and 6%, respectively. Sales in the wine and spirits segment plunged 47% year over year to $149.2 million in the fiscal first quarter. The decline mainly reflected a 64.1% drop in shipment volumes tied to the 2025 Wine Divestitures. On an organic basis, wine and spirits net sales rose 8%. Organic shipments increased 7.7%, while depletions grew 6.6%, led by gains of approximately 4% for Kim Crawford and 62% for Mi CAMPO Tequila. The wine and spirits portfolio outpaced the total wine and spirits category in both dollar and volume sales across Circana U.S. tracked channels. Peeking Into Constellation Brands' Margins STZ's comparable operating income came in at $834.2 million, up 6% year over year. Reported operating income rose 18% to $845.3 million, while reported operating margin expanded 630 basis points (bps). Operating income for the beer segment rose 2% year over year to $891.4 million. The segment operating margin was 39%, nearly flat year over year, as shipment volume growth and favorable pricing were offset by unfavorable mix and higher marketing and other SG&A spending. STZ's Financial Position Seems Strong As of March 31, 2026, Constellation Brands' cash and cash equivalents were $96.6 million, long-term debt (excluding current maturities) was $9 billion and total shareholders' equity (excluding non-controlling interest) was $8.5 billion. The company generated an operating cash flow of $662 million and an adjusted free cash flow of $485 million in fiscal 2026. STZ's board announced a quarterly dividend of $1.03 per share for Class A shares on June 30, 2026. The dividend is payable on Aug. 13 to its shareholders of record as of July 30, 2026. The company returned more than $400 million to its shareholders through share repurchases and dividends. It repurchased $324 million of shares year to date through June 2026. Constellation Brands still forecasts an operating cash flow of $2.4-$2.5 billion for fiscal 2027. It expects free cash flow of $1.6-$1.7 billion. STZ plans to incur capital expenditures of $800 million in fiscal 2027. Constellation Brands' FY27 Expectations Looking forward, Constellation Brands updated its fiscal 2027 reported EPS outlook to $11.50-$12.20, up from the previous estimate of $11.10-$11.80. The company expects comparable EPS of $11.20-$11.90 for fiscal 2027 compared with $11.82 earned in fiscal 2026. Enterprise and wine & spirits growth (decline) net sales assumptions for fiscal 2027 exclude $142 million for the March 1, 2025, to June 1, 2025, period. These are no longer part of the year-over-year results following the 2025 Wine Divestitures. STZ projects enterprise organic net sales growth (decline) of (1)%-1%, beer net sales growth (decline) of (1)%-1%, and wine & spirits business organic net sales growth (decline) of (1)%-1%. Enterprise operating margin on a reported and comparable basis is projected to be 32-33%, with beer operating margin of 37-38% and wine & spirits operating margin of 5-6%. How Have Estimates Been Moving Since Then? Since the earnings release, investors have witnessed a downward trend in estimates review. VGM Scores Currently, Constellation Brands has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a score of B on the value side, putting it in the top 40% for value investors. Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in. Outlook Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Constellation Brands has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. Beyond Nvidia: AI's Second Wave Is Here The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI's second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Constellation Brands Inc (STZ) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Constellation Brands (STZ) Down 3.8% Since Last Earnings Report: Can It Rebound?

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