It has been about a month since the last earnings report for Constellation Brands (STZ Quick QuoteSTZ - Free Report) . Shares have added about 22.9% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Constellation Brands due for a pullback? Well, first let's take a quick look at its latest 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.

STZ Q2 Earnings Call Highlights Improving Demand and Outlook

Constellation Brands 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.

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 volume in the Wine and Spirits business increased 15.4%.

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%. 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%. 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.

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.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, Constellation Brands has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock has 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 D. 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.