We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Constellation Brands Q2 Earnings Top Estimates on Beer and Wine Growth
Read MoreHide Full Article
Key Takeaways
Constellation Brands posted Q2 EPS of $3.74 as net sales rose 6% to $2.63 billion.
Beer sales grew 5%, while wine and spirits sales jumped 17% on higher shipment volumes.
STZ reaffirmed fiscal 2027 comparable EPS guidance of $11.20-$11.90 and cash flow targets.
Constellation Brands, Inc. (STZ - Free Report) reported second-quarter fiscal 2027 comparable earnings of $3.74 per share, up 3% year over year and above the Zacks Consensus Estimate of $3.62. The bottom line delivered a 3.3% earnings surprise.
Net sales increased 6% year over year to $2.63 billion, surpassing the consensus estimate of $2.57 billion by 2.5%. Growth across both operating businesses supported the top line. Beer shipment volumes rose 5.5%, while the wine and spirits’ business’ volume increased 15.4%.
Despite robust quarterly results, Constellation Brands’ shares have lost more than 4% in after-hours trading yesterday. In the past three months, the stock has fallen 10.6% compared with the industry’s 1.9% drop.
Image Source: Zacks Investment Research
STZ's Beer Business Drives Sales Growth
Beer net sales increased 5% year over year to $2.5 billion, driven by a 5.5% increase in shipment volumes. Depletions, which measure distributor shipments to retail customers, dipped 0.6%. Beer sales have outpaced the Zacks Consensus Estimate of $2.4 billion.
Modelo Especial depletions fell about 2%, while Corona Extra declined roughly 5%. These decreases were partially offset by growth of roughly 19% for Pacifico, 15% for Victoria and 5% for the Modelo Chelada brands. The Beer business was the top dollar and volume share gainer across Circana U.S. tracked channels.
Constellation Brands’ Wine and Spirits Business Improves
Wine and spirits net sales advanced 17% year over year to $159.4 million, reflecting a 15.4% increase in shipment volumes. The business also delivered depletion growth of 10.2%. Wine and spirits’ net sales have surpassed the Zacks Consensus Estimate of $136 million.
Kim Crawford and Mi CAMPO depletions increased roughly 11% and 51%, respectively. The portfolio outperformed the broader wine and spirits category in both dollars and volumes across Circana U.S. tracked channels, while the company's wine portfolio ranked as the #3 dollar share gainer in the overall wine category.
Constellation Brands Inc Price, Consensus and EPS Surprise
Comparable operating income rose 1% year over year to $896.6 million. Comparable operating margin contracted 160 basis points from the prior-year quarter to 34.1%.
Beer operating income increased 1% to $964.2 million, but its operating margin fell 160 basis points year over year to 39%. Lower tariff expenses and fixed-cost absorption were more than offset by higher marketing investment and other selling, general and administrative spending. Wine and spirits generated operating income of $6.1 million against a loss of $19.8 million a year earlier, lifting its margin to 3.8%.
For the first six months of fiscal 2027, operating cash flow totaled $1.5 billion. Free cash flow increased to $1.1 billion, while capital expenditures were $354.1 million.
As of Aug. 31, 2026, cash and cash equivalents were $98.5 million. Long-term debt, excluding current maturities, totaled $9.1 billion. The company repurchased $530 million of shares year to date through September and returned more than $800 million to shareholders through repurchases and dividends during the first half.
On Oct. 6, 2026, the company’s board declared a quarterly cash dividend of $1.03 per share of Class A common stock payable Nov. 13, 2026, to stockholders of record as of Oct. 30, 2026.
Constellation Brands Expands Its RTD Portfolio
Subsequent to the quarter, the company acquired SpikedAde, a spirit-based ready-to-drink brand competing in the emerging sports drink-inspired "Ade" segment. Constellation Brands paid $75 million at closing for full ownership, with up to $278 million of additional contingent consideration payable over five years based on future performance.
SpikedAde will be integrated into Constellation's Beer unit, with the company assuming production oversight, marketing and distribution.
STZ Reaffirms Comparable Earnings Outlook
Constellation Brands reaffirmed its fiscal 2027 comparable earnings guidance of $11.20-$11.90 per share compared with $11.82 in fiscal 2026. It raised its reported earnings outlook to $11.85-$12.55 from the prior range of $11.50-$12.20.
Management continues to expect enterprise organic net sales to range from a 1% decline to 1% growth. Beer net sales and organic wine and spirits net sales are also projected to range from a 1% decline to 1% growth. Comparable enterprise operating margin is expected to be between 32% and 33%, with beer margin of 37-38% and wine and spirits margin of 5-6%.
Management expects operating cash flow of $2.4-$2.5 billion, capital expenditures of $800 million and free cash flow of $1.6-$1.7 billion for fiscal 2027.
The Zacks Consensus Estimate for Chefs' Warehouse's current financial-year sales indicates growth of 10.8% from the prior-year level. CHEF delivered a trailing four-quarter earnings surprise of 30.4%, on average.
Utz Brands, Inc. (UTZ - Free Report) , which is a leading manufacturer of a diverse portfolio of salty snacks, currently carries a Zacks Rank #2 (Buy). UTZ delivered a trailing four-quarter earnings surprise of 1.8%, on average.
The Zacks Consensus Estimate for UTZ’s current financial-year sales indicates a jump of 3.7% from the year-ago number.
Darling Ingredients Inc. (DAR - Free Report) , which produces sustainable natural ingredients derived from edible and inedible bio-nutrients, currently carries a Zacks Rank of 2.
The consensus estimate for Darling Ingredients’ current financial-year sales is expected to rise 11.5% from the year-ago reported figure. DAR delivered a trailing four-quarter earnings surprise of 38.9%, on average.
View the Zacks #1 Rank List
Image: Bigstock
Constellation Brands Q2 Earnings Top Estimates on Beer and Wine Growth
Key Takeaways
Constellation Brands, Inc. (STZ - Free Report) reported second-quarter fiscal 2027 comparable earnings of $3.74 per share, up 3% year over year and above the Zacks Consensus Estimate of $3.62. The bottom line delivered a 3.3% earnings surprise.
Net sales increased 6% year over year to $2.63 billion, surpassing the consensus estimate of $2.57 billion by 2.5%. Growth across both operating businesses supported the top line. Beer shipment volumes rose 5.5%, while the wine and spirits’ business’ volume increased 15.4%.
Despite robust quarterly results, Constellation Brands’ shares have lost more than 4% in after-hours trading yesterday. In the past three months, the stock has fallen 10.6% compared with the industry’s 1.9% drop.
Image Source: Zacks Investment Research
STZ's Beer Business Drives Sales Growth
Beer net sales increased 5% year over year to $2.5 billion, driven by a 5.5% increase in shipment volumes. Depletions, which measure distributor shipments to retail customers, dipped 0.6%. Beer sales have outpaced the Zacks Consensus Estimate of $2.4 billion.
Modelo Especial depletions fell about 2%, while Corona Extra declined roughly 5%. These decreases were partially offset by growth of roughly 19% for Pacifico, 15% for Victoria and 5% for the Modelo Chelada brands. The Beer business was the top dollar and volume share gainer across Circana U.S. tracked channels.
Constellation Brands’ Wine and Spirits Business Improves
Wine and spirits net sales advanced 17% year over year to $159.4 million, reflecting a 15.4% increase in shipment volumes. The business also delivered depletion growth of 10.2%. Wine and spirits’ net sales have surpassed the Zacks Consensus Estimate of $136 million.
Kim Crawford and Mi CAMPO depletions increased roughly 11% and 51%, respectively. The portfolio outperformed the broader wine and spirits category in both dollars and volumes across Circana U.S. tracked channels, while the company's wine portfolio ranked as the #3 dollar share gainer in the overall wine category.
Constellation Brands Inc Price, Consensus and EPS Surprise
Constellation Brands Inc price-consensus-eps-surprise-chart | Constellation Brands Inc Quote
STZ's Operating Profitability Shows Mixed Trends
Comparable operating income rose 1% year over year to $896.6 million. Comparable operating margin contracted 160 basis points from the prior-year quarter to 34.1%.
Beer operating income increased 1% to $964.2 million, but its operating margin fell 160 basis points year over year to 39%. Lower tariff expenses and fixed-cost absorption were more than offset by higher marketing investment and other selling, general and administrative spending. Wine and spirits generated operating income of $6.1 million against a loss of $19.8 million a year earlier, lifting its margin to 3.8%.
Constellation Brands Maintains Strong Cash Generation
For the first six months of fiscal 2027, operating cash flow totaled $1.5 billion. Free cash flow increased to $1.1 billion, while capital expenditures were $354.1 million.
As of Aug. 31, 2026, cash and cash equivalents were $98.5 million. Long-term debt, excluding current maturities, totaled $9.1 billion. The company repurchased $530 million of shares year to date through September and returned more than $800 million to shareholders through repurchases and dividends during the first half.
On Oct. 6, 2026, the company’s board declared a quarterly cash dividend of $1.03 per share of Class A common stock payable Nov. 13, 2026, to stockholders of record as of Oct. 30, 2026.
Constellation Brands Expands Its RTD Portfolio
Subsequent to the quarter, the company acquired SpikedAde, a spirit-based ready-to-drink brand competing in the emerging sports drink-inspired "Ade" segment. Constellation Brands paid $75 million at closing for full ownership, with up to $278 million of additional contingent consideration payable over five years based on future performance.
SpikedAde will be integrated into Constellation's Beer unit, with the company assuming production oversight, marketing and distribution.
STZ Reaffirms Comparable Earnings Outlook
Constellation Brands reaffirmed its fiscal 2027 comparable earnings guidance of $11.20-$11.90 per share compared with $11.82 in fiscal 2026. It raised its reported earnings outlook to $11.85-$12.55 from the prior range of $11.50-$12.20.
Management continues to expect enterprise organic net sales to range from a 1% decline to 1% growth. Beer net sales and organic wine and spirits net sales are also projected to range from a 1% decline to 1% growth. Comparable enterprise operating margin is expected to be between 32% and 33%, with beer margin of 37-38% and wine and spirits margin of 5-6%.
Management expects operating cash flow of $2.4-$2.5 billion, capital expenditures of $800 million and free cash flow of $1.6-$1.7 billion for fiscal 2027.
Stocks to Consider in the Consumer Staples Space
The Chefs' Warehouse, Inc. (CHEF - Free Report) , which is a distributor of specialty food products in the United States, 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 Chefs' Warehouse's current financial-year sales indicates growth of 10.8% from the prior-year level. CHEF delivered a trailing four-quarter earnings surprise of 30.4%, on average.
Utz Brands, Inc. (UTZ - Free Report) , which is a leading manufacturer of a diverse portfolio of salty snacks, currently carries a Zacks Rank #2 (Buy). UTZ delivered a trailing four-quarter earnings surprise of 1.8%, on average.
The Zacks Consensus Estimate for UTZ’s current financial-year sales indicates a jump of 3.7% from the year-ago number.
Darling Ingredients Inc. (DAR - Free Report) , which produces sustainable natural ingredients derived from edible and inedible bio-nutrients, currently carries a Zacks Rank of 2.
The consensus estimate for Darling Ingredients’ current financial-year sales is expected to rise 11.5% from the year-ago reported figure. DAR delivered a trailing four-quarter earnings surprise of 38.9%, on average.