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STZ Q2 Earnings Beat, Sales Down on Soft Wine & Spirits Business
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Key Takeaways
Q2 FY26 EPS of $3.63 beat estimates but dropped 16% year over year; sales fell 15% to $2.48B.
Beer sales declined 7%, hurt by softer demand and inventory rebalancing, partly offset by Pacifico growth.
STZ generated $1.1B in free cash flow and returned $604M via buybacks and dividends.
Constellation Brands, Inc. (STZ - Free Report) reported second-quarter fiscal 2026 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. The company’s sales and earnings declined year over year on weak consumer demand trends, due to tough socioeconomic factors.
Comparable earnings per share (EPS) of $3.63 dropped 16% year over year in the fiscal second quarter but surpassed the Zacks Consensus Estimate of $3.37. On a reported basis, the company’s EPS was $2.65 against a loss per share of $6.59 reported in the year-earlier quarter.
Net sales declined 15% year over year to $2.48 billion but came above the Zacks Consensus Estimate of $2.46 billion. Organic net sales dipped 8% year over year.
Constellation Brands’ stock gained 3.3% in the after-market trading session following the earnings release. The uptick in share price can be attributed to the company’s better-than-expected second-quarter fiscal 2026 top and bottom-line performances.
Constellation Brands Inc Price, Consensus and EPS Surprise
Constellation Brands' sales for the beer business fell 7% year over year to $2.35 billion, backed by a decline of 8.7% in shipment volumes. The shipment decline resulted from socioeconomic headwinds, which led to soft consumer demand as well as distributor inventory rebalancing. Depletions dipped 2.7%, mainly due to declines of just more than 4%, just above 7% and almost 3% in Modelo Especial, Corona Extra and the Modelo Chelada brands, respectively. This was partly offset by 13% depletion growth for the Pacifico and 19% for Victoria.
Sales in the wine and spirits segment plunged 65% year over year to $136 million in the fiscal second quarter. Sales were hurt by a 76.4% decline in shipment volumes, reflecting the impacts of the SVEDKA divestiture and the 2025 Wine divestitures, as well as changes in financial and volume with respect to distributor contractual obligations. However, depletions grew nearly 2%.
Peeking Into Constellation Brands’ Margins
STZ's comparable operating income was $886.2 million, down from $1,019.1 million recorded in the prior-year quarter. The decline is attributed to the soft operating income in the beer, wine and spirits businesses.
Operating income for the beer segment fell 12% year over year to $951.6 million. The beer segment’s operating margin contracted 200 basis points to 40.6%, owing to higher COGS, including fixed cost absorption from reduced volumes and aluminum tariffs, and higher marketing, as a percentage of net sales, somewhat offset by favorable pricing.
The wine and spirits segment reported an operating loss of $19.8 million against an operating income of $70.5 million in the year-ago quarter. The segment’s operating margin contracted significantly due to the unfavorable impacts of the SVEDKA Divestiture and the 2025 Wine Divestitures, and changes in financial and volume-related distributor contractual obligations.
STZ’s Financial Position Seems Strong
As of Aug. 31, 2025, Constellation Brands’ cash and cash equivalents were $72 million, long-term debt (excluding current maturities) was $9.8 billion and total shareholders’ equity (excluding non-controlling interest) 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 the six months of fiscal 2026.
STZ’s board announced a quarterly dividend of $1.02 per share for Class A shares on Sept. 30, 2025. The dividend is payable on Nov. 13 to its shareholders of record as of Oct. 30.
The company’s strong cash flow generation over the first six months of fiscal 2026 enabled it to consistently execute disciplined capital allocation priorities. The company returned nearly $604 million to shareholders through share repurchases.
Constellation Brands forecasts an operating cash flow of $2.5-$2.6 billion for fiscal 2026. It expects a free cash flow of $1.3-$1.4 billion. STZ plans to incur capital expenditures of $1.2 billion in fiscal 2026, including $1 billion expected to be spent on the planned expansion of Mexico beer operations.
Constellation Brands’ FY26 Expectations
Management now projects enterprise organic net sales decrease of 4-6% compared with a decline of 2% and an increase of 1% for fiscal 2026 anticipated earlier. Beer segment net sales are likely to decline 2-4% against the previous guidance of 0-3% growth. However, organic net sales for the wine and spirits segment are still expected to decline 17-20%.
Constellation Brands anticipates enterprise operating income, on a reported basis, to increase 667-687% for fiscal 2026 (compared with 742-760% estimated earlier), while the comparable operating income is expected to decline 9-11% compared with 1-3% drop anticipated earlier. The company expects operating income to fall 7-9% for the beer segment and decline 97-100% for the wine and spirits segment. Corporate expenses are expected to be $225 million for fiscal 2026.
The company anticipates an comparable EPS guidance of $11.30-$11.60 for fiscal 2026. STZ expects the reported fiscal 2026 EPS to be $9.86-$10.16 compared with $12.07-$12.37 mentioned earlier. It recorded a comparable EPS of $13.78 and a reported loss per share of 45 cents in fiscal 2025.
Constellation Brands predicts interest expenses of $370 million for fiscal 2026. It anticipates a reported tax rate of 18% and a comparable tax rate of 19% for fiscal 2026. The company expects shares outstanding to be 176 million at the end of fiscal 2026, inclusive of share repurchases.
Shares of this Zacks Rank #5 (Strong Sell) company have lost 18.6% in the past three months compared with the industry’s decline of 10.3%.
The Zacks Consensus Estimate for United Natural Foods' current financial-year sales and earnings indicates growth of 2.4% and 167.6%, respectively, from the prior-year levels. UNFI delivered a trailing four-quarter earnings surprise of 416.2%, on average.
Celsius Holdings, Inc. (CELH - Free Report) , which specializes in nutritional functional foods, beverages and dietary supplements, starches and nutrition ingredients, currently sports a Zacks Rank of 1.
The Zacks Consensus Estimate for Celsius’ current financial-year earnings is expected to rise 55.7% from the corresponding year-ago reported figure. CELH delivered a trailing four-quarter earnings surprise of 5.4%, on average.
Post Holdings (POST - Free Report) , which is a consumer-packaged goods holding company, currently carries a Zacks Rank #2 (Buy). POST delivered a trailing four-quarter earnings surprise of 21.4%, on average.
The Zacks Consensus Estimate for Post Holdings’ current financial-year earnings indicates growth of 11% from the year-ago number.
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STZ Q2 Earnings Beat, Sales Down on Soft Wine & Spirits Business
Key Takeaways
Constellation Brands, Inc. (STZ - Free Report) reported second-quarter fiscal 2026 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. The company’s sales and earnings declined year over year on weak consumer demand trends, due to tough socioeconomic factors.
Comparable earnings per share (EPS) of $3.63 dropped 16% year over year in the fiscal second quarter but surpassed the Zacks Consensus Estimate of $3.37. On a reported basis, the company’s EPS was $2.65 against a loss per share of $6.59 reported in the year-earlier quarter.
Net sales declined 15% year over year to $2.48 billion but came above the Zacks Consensus Estimate of $2.46 billion. Organic net sales dipped 8% year over year.
Constellation Brands’ stock gained 3.3% in the after-market trading session following the earnings release. The uptick in share price can be attributed to the company’s better-than-expected second-quarter fiscal 2026 top and bottom-line performances.
Constellation Brands Inc Price, Consensus and EPS Surprise
Constellation Brands Inc price-consensus-eps-surprise-chart | Constellation Brands Inc Quote
STZ’s Q2 Performance Details
Constellation Brands' sales for the beer business fell 7% year over year to $2.35 billion, backed by a decline of 8.7% in shipment volumes. The shipment decline resulted from socioeconomic headwinds, which led to soft consumer demand as well as distributor inventory rebalancing. Depletions dipped 2.7%, mainly due to declines of just more than 4%, just above 7% and almost 3% in Modelo Especial, Corona Extra and the Modelo Chelada brands, respectively. This was partly offset by 13% depletion growth for the Pacifico and 19% for Victoria.
Sales in the wine and spirits segment plunged 65% year over year to $136 million in the fiscal second quarter. Sales were hurt by a 76.4% decline in shipment volumes, reflecting the impacts of the SVEDKA divestiture and the 2025 Wine divestitures, as well as changes in financial and volume with respect to distributor contractual obligations. However, depletions grew nearly 2%.
Peeking Into Constellation Brands’ Margins
STZ's comparable operating income was $886.2 million, down from $1,019.1 million recorded in the prior-year quarter. The decline is attributed to the soft operating income in the beer, wine and spirits businesses.
Operating income for the beer segment fell 12% year over year to $951.6 million. The beer segment’s operating margin contracted 200 basis points to 40.6%, owing to higher COGS, including fixed cost absorption from reduced volumes and aluminum tariffs, and higher marketing, as a percentage of net sales, somewhat offset by favorable pricing.
The wine and spirits segment reported an operating loss of $19.8 million against an operating income of $70.5 million in the year-ago quarter. The segment’s operating margin contracted significantly due to the unfavorable impacts of the SVEDKA Divestiture and the 2025 Wine Divestitures, and changes in financial and volume-related distributor contractual obligations.
STZ’s Financial Position Seems Strong
As of Aug. 31, 2025, Constellation Brands’ cash and cash equivalents were $72 million, long-term debt (excluding current maturities) was $9.8 billion and total shareholders’ equity (excluding non-controlling interest) 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
the six months of fiscal 2026.
STZ’s board announced a quarterly dividend of $1.02 per share for Class A shares on Sept. 30, 2025. The dividend is payable on Nov. 13 to its shareholders of record as of Oct. 30.
The company’s strong cash flow generation over the first six months of fiscal 2026 enabled it to consistently execute disciplined capital allocation priorities. The company returned nearly $604 million to shareholders through share repurchases.
Constellation Brands forecasts an operating cash flow of $2.5-$2.6 billion for fiscal 2026. It expects a free cash flow of $1.3-$1.4 billion. STZ plans to incur capital expenditures of $1.2 billion in fiscal 2026, including $1 billion expected to be spent on the planned expansion of Mexico beer operations.
Constellation Brands’ FY26 Expectations
Management now projects enterprise organic net sales decrease of 4-6% compared with a decline of 2% and an increase of 1% for fiscal 2026 anticipated earlier. Beer segment net sales are likely to decline 2-4% against the previous guidance of 0-3% growth. However, organic net sales for the wine and spirits segment are still expected to decline 17-20%.
Constellation Brands anticipates enterprise operating income, on a reported basis, to increase 667-687% for fiscal 2026 (compared with 742-760% estimated earlier), while the comparable operating income is expected to decline 9-11% compared with 1-3% drop anticipated earlier. The company expects operating income to fall 7-9% for the beer segment and decline 97-100% for the wine and spirits segment. Corporate expenses are expected to be $225 million for fiscal 2026.
The company anticipates an comparable EPS guidance of $11.30-$11.60 for fiscal 2026. STZ expects the reported fiscal 2026 EPS to be $9.86-$10.16 compared with $12.07-$12.37 mentioned earlier. It recorded a comparable EPS of $13.78 and a reported loss per share of 45 cents in fiscal 2025.
Constellation Brands predicts interest expenses of $370 million for fiscal 2026. It anticipates a reported tax rate of 18% and a comparable tax rate of 19% for fiscal 2026. The company expects shares outstanding to be 176 million at the end of fiscal 2026, inclusive of share repurchases.
Shares of this Zacks Rank #5 (Strong Sell) company have lost 18.6% in the past three months compared with the industry’s decline of 10.3%.
Stocks to Consider in the Consumer Staples Space
United Natural Foods (UNFI - Free Report) is a key distributor of natural, organic and specialty food and non-food products. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for United Natural Foods' current financial-year sales and earnings indicates growth of 2.4% and 167.6%, respectively, from the prior-year levels. UNFI delivered a trailing four-quarter earnings surprise of 416.2%, on average.
Celsius Holdings, Inc. (CELH - Free Report) , which specializes in nutritional functional foods, beverages and dietary supplements, starches and nutrition ingredients, currently sports a Zacks Rank of 1.
The Zacks Consensus Estimate for Celsius’ current financial-year earnings is expected to rise 55.7% from the corresponding year-ago reported figure. CELH delivered a trailing four-quarter earnings surprise of 5.4%, on average.
Post Holdings (POST - Free Report) , which is a consumer-packaged goods holding company, currently carries a Zacks Rank #2 (Buy). POST delivered a trailing four-quarter earnings surprise of 21.4%, on average.
The Zacks Consensus Estimate for Post Holdings’ current financial-year earnings indicates growth of 11% from the year-ago number.