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Beer sales rose 2% y/y to $2.284B, led by higher shipments and pricing despite softer depletions.
Wine and Spirits organic sales grew 8%, while cash flow supported dividends and buybacks.
Constellation Brands, Inc. (STZ - Free Report) delivered a solid first-quarter fiscal 2027 performance, surpassing earnings and revenue expectations despite lower reported sales following last year's wine divestitures. Growth continued to be led by the Beer business, while the streamlined Wine and Spirits portfolio showed encouraging organic momentum. Higher profitability, disciplined pricing, healthy cash generation and continued market-share gains underscored the quarter, although softer beer depletions for flagship brands and a cautious consumer backdrop remain areas to monitor.
Constellation Brands continues to execute against its long-term strategy by focusing on premium beer, optimizing its Wine and Spirits portfolio and maintaining disciplined capital allocation. A closer evaluation of the company's financial and operating metrics provides deeper insight into the quality of its earnings and future growth trajectory. (Read more: Constellation Brands' Q1 Earnings Beat, Sales Top on Beer Strength)
Constellation Brands Inc Price, Consensus and EPS Surprise
The Beer business once again remained the primary growth engine during the quarter. Net sales increased 2% year over year to $2.28 billion, beating the Zacks Consensus Estimate of $2.27 billion, driven by a 1.8% rise in shipment volumes and favorable pricing. Beer operating income also grew 2% to $891.4 million, surpassing the Zacks Consensus Estimate of $878 million. However, the operating margin remained nearly flat at 39% as higher marketing investments and an unfavorable sales mix offset pricing benefits. Despite a modest 0.3% decline in depletions, Constellation Brands continued to outperform the broader U.S. beer industry, ranking as the top dollar-share gainer across Circana-tracked channels. Pacifico and Victoria delivered particularly strong depletion growth, helping offset softer trends in Modelo Especial and Corona Extra.
The Wine and Spirits segment continued to reflect the impact of the 2025 divestitures, with reported net sales declining 47% year over year to $149.2 million, but beating the Zacks Consensus Estimate of $142 million. However, the underlying business showed meaningful improvement. Organic net sales increased 8%, supported by 7.7% organic shipment growth and 6.6% depletion growth. Brands such as Kim Crawford and Mi CAMPO Tequila continued to perform well, enabling the portfolio to outperform the broader wine and spirits category in both dollar and volume sales. The segment also reported an operating loss of $1.1 million, narrower than both the year-ago loss of $6 million and the Zacks Consensus Estimate for a loss of $1.37 million, as improved volumes and lower operating expenses partly offset the effect of the divestitures.
Profitability strengthened across the enterprise. Comparable operating income increased 6% year over year, while reported operating income climbed 18%, reflecting improved gross margins, lower impairment-related charges and disciplined expense management. The company generated operating cash flow of $662 million and free cash flow of $485 million during the quarter, allowing it to return more than $400 million to shareholders through dividends and share repurchases while continuing to invest in brewery expansion projects.
Constellation Brands also reaffirmed confidence in its financial outlook by raising its fiscal 2027 reported EPS guidance while maintaining its comparable EPS, operating cash flow and free cash flow targets. Although management still expects a relatively modest sales environment, continued pricing discipline, premium brand strength, market-share gains and strong cash generation position the company well to deliver stable earnings growth through fiscal 2027.
Shares of this Zacks Rank #3 (Hold) company have lost 4% in the past six months against the industry’s growth of 12%.
The Zacks Consensus Estimate for ARKO's current fiscal-year sales implies a decline of 2.8%, while the same for current fiscal-year earnings implies growth of 93.3% from the year-ago reported figures. ARKO delivered a trailing four-quarter earnings surprise of 43.2%, on average.
Fomento Economico Mexicano (FMX - Free Report) is a leading multinational consumer company with operations spanning proximity retail, fuel, health, digital financial services, logistics and distribution, while also holding a controlling stake in Coca-Cola FEMSA, the world's largest Coca-Cola franchise bottler. The company presently flaunts a Zacks Rank #1.
FMX delivered a trailing four-quarter negative earnings surprise of 17%, on average. The Zacks Consensus Estimate for FMX’s current financial-year sales and EPS indicates growth of 17.3% and 130.9%, respectively, from the year-ago reported numbers.
The Coca-Cola Company (KO - Free Report) is a global beverage giant with a portfolio of more than 4,700 beverage products (and more than 500 brands), ranging from sodas (or sparkling beverages) to energy drinks. KO currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Coca-Cola’s 2026 sales and earnings indicates growth of 3% and 8.7%, respectively, from the year-ago reported numbers. KO delivered a trailing four-quarter earnings surprise of 4.5%, on average.
View the Zacks #1 Rank List
Image: Bigstock
Q1 Deep Dive: Evaluating STZ's Financial and Operating Metrics
Key Takeaways
Constellation Brands, Inc. (STZ - Free Report) delivered a solid first-quarter fiscal 2027 performance, surpassing earnings and revenue expectations despite lower reported sales following last year's wine divestitures. Growth continued to be led by the Beer business, while the streamlined Wine and Spirits portfolio showed encouraging organic momentum. Higher profitability, disciplined pricing, healthy cash generation and continued market-share gains underscored the quarter, although softer beer depletions for flagship brands and a cautious consumer backdrop remain areas to monitor.
Constellation Brands continues to execute against its long-term strategy by focusing on premium beer, optimizing its Wine and Spirits portfolio and maintaining disciplined capital allocation. A closer evaluation of the company's financial and operating metrics provides deeper insight into the quality of its earnings and future growth trajectory. (Read more: Constellation Brands' Q1 Earnings Beat, Sales Top on Beer Strength)
Constellation Brands Inc Price, Consensus and EPS Surprise
Constellation Brands Inc price-consensus-eps-surprise-chart | Constellation Brands Inc Quote
STZ's Q1 Key Financial Metrics Discussion
The Beer business once again remained the primary growth engine during the quarter. Net sales increased 2% year over year to $2.28 billion, beating the Zacks Consensus Estimate of $2.27 billion, driven by a 1.8% rise in shipment volumes and favorable pricing. Beer operating income also grew 2% to $891.4 million, surpassing the Zacks Consensus Estimate of $878 million. However, the operating margin remained nearly flat at 39% as higher marketing investments and an unfavorable sales mix offset pricing benefits. Despite a modest 0.3% decline in depletions, Constellation Brands continued to outperform the broader U.S. beer industry, ranking as the top dollar-share gainer across Circana-tracked channels. Pacifico and Victoria delivered particularly strong depletion growth, helping offset softer trends in Modelo Especial and Corona Extra.
The Wine and Spirits segment continued to reflect the impact of the 2025 divestitures, with reported net sales declining 47% year over year to $149.2 million, but beating the Zacks Consensus Estimate of $142 million. However, the underlying business showed meaningful improvement. Organic net sales increased 8%, supported by 7.7% organic shipment growth and 6.6% depletion growth. Brands such as Kim Crawford and Mi CAMPO Tequila continued to perform well, enabling the portfolio to outperform the broader wine and spirits category in both dollar and volume sales. The segment also reported an operating loss of $1.1 million, narrower than both the year-ago loss of $6 million and the Zacks Consensus Estimate for a loss of $1.37 million, as improved volumes and lower operating expenses partly offset the effect of the divestitures.
Profitability strengthened across the enterprise. Comparable operating income increased 6% year over year, while reported operating income climbed 18%, reflecting improved gross margins, lower impairment-related charges and disciplined expense management. The company generated operating cash flow of $662 million and free cash flow of $485 million during the quarter, allowing it to return more than $400 million to shareholders through dividends and share repurchases while continuing to invest in brewery expansion projects.
Constellation Brands also reaffirmed confidence in its financial outlook by raising its fiscal 2027 reported EPS guidance while maintaining its comparable EPS, operating cash flow and free cash flow targets. Although management still expects a relatively modest sales environment, continued pricing discipline, premium brand strength, market-share gains and strong cash generation position the company well to deliver stable earnings growth through fiscal 2027.
Shares of this Zacks Rank #3 (Hold) company have lost 4% in the past six months against the industry’s growth of 12%.
STZ Stock's 6-Month Price Performance
Image Source: Zacks Investment Research
Stocks to Consider
ARKO Corp. (ARKO - Free Report) operates a chain of convenience stores in the United States. ARKO 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 ARKO's current fiscal-year sales implies a decline of 2.8%, while the same for current fiscal-year earnings implies growth of 93.3% from the year-ago reported figures. ARKO delivered a trailing four-quarter earnings surprise of 43.2%, on average.
Fomento Economico Mexicano (FMX - Free Report) is a leading multinational consumer company with operations spanning proximity retail, fuel, health, digital financial services, logistics and distribution, while also holding a controlling stake in Coca-Cola FEMSA, the world's largest Coca-Cola franchise bottler. The company presently flaunts a Zacks Rank #1.
FMX delivered a trailing four-quarter negative earnings surprise of 17%, on average. The Zacks Consensus Estimate for FMX’s current financial-year sales and EPS indicates growth of 17.3% and 130.9%, respectively, from the year-ago reported numbers.
The Coca-Cola Company (KO - Free Report) is a global beverage giant with a portfolio of more than 4,700 beverage products (and more than 500 brands), ranging from sodas (or sparkling beverages) to energy drinks. KO currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Coca-Cola’s 2026 sales and earnings indicates growth of 3% and 8.7%, respectively, from the year-ago reported numbers. KO delivered a trailing four-quarter earnings surprise of 4.5%, on average.