STZ Q4 Earnings & Sales Beat, Stock Dips 3.6% on Cautious FY26 View

Constellation Brands, Inc. (STZ Quick QuoteSTZ – Free Report) has reported fourth-quarter fiscal 2025 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. The company’s sales and earnings improved year over year. Despite softer consumer demand in fiscal 2025, the company achieved another year of Enterprise net sales growth, significant improvement in comparable operating margin and double-digit growth in comparable EPS.

The company remains focused on driving distribution gains, pursuing disciplined innovation and increasing marketing investments in its beer business. STZ also improved efficiency across the enterprise and repositioned its wine and spirits business to operate exclusively in higher-growth, premium segments.

Comparable earnings per share (EPS) of $2.63 improved 14% year over year in the fiscal fourth quarter and beat the Zacks Consensus Estimate of $2.28. On a reported basis, the company incurred a loss of $2.09 against an EPS of $2.14 in the year-ago quarter. The company’s reported EPS included a non-cash goodwill impairment loss of $547.7 million for the wine and spirits business.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Net sales increased 1% year over year to $2.16 billion and surpassed the Zacks Consensus Estimate of $2.13 billion.

Constellation Brands stock declined 3.6% in the after-market trading session following the earnings. The decline in share price can be attributed to the company’s cautious view for fiscal 2026. Shares of this Zacks Rank #3 (Hold) company have declined 1.4% in the past three months against the industry’s growth of 5.3%.

 

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Looking at STZ’s Q4 Performance Details

Constellation Brands’ sales for the beer business were almost flat year over year at $1.7 billion, backed by declines of 1.8% in shipment volumes, largely offset by pricing. Depletion volumes dipped 1%, mainly due to declines of 1%, 6% and 3% in Modelo Especial, Corona Extra and the Modelo Chelada brands, respectively. This was partly offset by depletion growth of 16% in the Pacifico brand.

Sales in the wine and spirits segment improved 5% year over year to $459.8 million in the fiscal fourth quarter. Sales benefited from a 3.5% increase in shipment volumes, offset by a 2.4% decline in depletions. Organic sales for the wine and spirits segment rose 11% in the quarter, led by a 15.7% improvement in shipment volume. Sales growth was supported by contractual distributor payments, a favorable product mix and volume growth in the U.S. wholesale business, along with increased international volumes, primarily driven by Canada.

 

Peeking Into Constellation Brands’ Margins

STZ’s comparable operating income was $659 million, up 6% from the prior-year quarter. This rise was driven by robust operating income in the beer business, offset by a decline in the wine and spirits segment.

Operating income for the beer segment improved 7% year over year to $623.8 million. The beer segment’s operating margin grew 220 basis points to 36.6%, supported by favorable pricing, ongoing cost-saving initiatives and the absence of an indirect tax receivable write-off from fiscal 2024. This growth was partially offset by increased marketing expenses.

Operating income for the wine and spirits segment declined 10% year over year to $99.7 million. The segment’s operating margin contracted 380 bps to 21.7%, as benefits from contractual distributor payments were outweighed by increased cost of goods sold, as well as higher marketing and general and administrative expenses.

STZ’s Financial Position Seems Strong

As of Feb. 28, 2025, Constellation Brands’ cash and cash equivalents were $68.1 million, long-term debt (excluding current maturities) was $9.3 billion and total shareholders’ equity (excluding non-controlling interest) was $6.9 billion. The company generated an operating cash flow of $3.2 billion and an adjusted free cash flow of $1.9 billion for fiscal 2025.

STZ’s board announced a quarterly dividend of $1.02 per share for Class A shares on April 9, 2025. The dividend is payable on May 15 to its shareholders of record as of April 29.

In fiscal 2025, the company’s strong cash flow generation allowed it to consistently execute disciplined capital allocation priorities. The company returned nearly $1.9 billion to shareholders through share repurchases and dividends, and continued investing in the business, primarily through our Beer brewery expansion.

Looking ahead, STZ remains committed to these balanced priorities as it plans to deploy approximately $9 billion in operating cash flow between fiscal 2026 and 2028, including the new $4 billion share repurchase authorization for that period.

Constellation Brands’ FY26 Expectations

Constellation Brands outlined its outlook for fiscal 2026. Management anticipates enterprise organic net sales between a decline of 2% and an increase of 1% for fiscal 2026, with 0-3% net sales growth for the beer segment. However, organic net sales for the wine and spirits segment are expected to decline 17-20%.

STZ anticipates enterprise operating income, on a reported basis, to increase 765-783% for fiscal 2026, while the comparable operating income is expected to decline 3-1%. The company expects operating income to improve 0-2% for the beer segment and decline 97-100% for the wine and spirits segment. Corporate expenses are expected to be $265 million for fiscal 2026.

The company anticipates comparable EPS guidance of $12.60-$12.90 for fiscal 2026. STZ expects reported fiscal 2026 EPS to be $12.33-$12.63. It recorded a comparable EPS of $13.78 and a reported loss of $45 in fiscal 2025.

Constellation Brands predicts interest expenses of $385 million for fiscal 2026. It anticipates a reported and comparable tax rate of 18% for fiscal 2026. The company expects shares outstanding to be 176 million at the end of fiscal 2026, inclusive of share repurchases.

Constellation Brands forecasts operating cash flow of $2.7-$2.8 billion for fiscal 2026. It expects a free cash flow of $1.5-$1.6 billion. STZ plans to incur a capital expenditure of $1.2 billion in fiscal 2026, including $1 billion expected to be spent for the planned Mexico beer operations expansion activities.

STZ’s Revised Medium-Term Outlook

Constellation Brands updated its fiscal 2027 and 2028 (medium-term) outlook. The company expects enterprise net sales growth of 2-4% for the period, with an increase of 2-4% in the beer business and a flat to 3% rise in the wine and spirits segment. STZ estimates enterprise operating income margin to be 35-36% for the medium term, including 39-40% for the beer business and 22-24% for the wine and spirits business. The company expects equity in earnings of $30 million.

Constellation Brands predicts interest expenses of $430-$440 million for fiscal 2027 and $440-$450 million for fiscal 2028. It anticipates an effective tax rate of 20% and 22% for fiscal 2027 and 2028, respectively. The company expects shares outstanding to be 171 million at the end of fiscal 2027 and 166 million at the end of fiscal 2028. STZ expects a non-controlling interest of $55 million for the medium term.

The company anticipates EPS growth of mid-single-digit to low-double-digit for fiscal 2027 and low-single-digit to mid-single-digit for fiscal 2028. Constellation Brands forecasts operating cash flow to grow between high-single-digit and low-double-digit in the medium term. It expects a free cash flow to increase double digits year over year.

Capital expenditure for fiscal 2027 and 2028 is expected to decline 40% and 35%, respectively, year over year. This includes cumulative capital spending of $1 billion for the beer business and $0.2 billion for the wine and spirits business and corporate.

Stocks to Consider

We have highlighted three better-ranked stocks from the Consumer Staple sector, namely Molson Coors (TAP Quick QuoteTAP – Free Report) , Primo Brands Corporation (PRMB Quick QuotePRMB – Free Report) and Fomento Economico Mexicano (FMX Quick QuoteFMX – Free Report) .

Molson Coors is a global manufacturer and seller of beer and other beverage products. TAP sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus estimate for Molson Coors’ current financial year’s sales and earnings per share indicates growth of 0.1% and 6.9%, respectively, from the year-ago reported figures. TAP delivered a trailing four-quarter earnings surprise of 18.1%, on average.

Primo Brands is a branded beverage company with a focus on healthy hydration, delivering sustainably and domestically sourced diversified offerings across products, formats, channels, price points and consumer occasions, distributed primarily in every state and Canada. PRMB currently flaunts a Zacks Rank #1.

The Zacks Consensus Estimate for PRMB’s current financial-year sales and earnings indicates growth of 146.9% and 57.4%, respectively, from the year-ago reported figures. It delivered a trailing four-quarter earnings surprise of 7.2%, on average.

Fomento Economico Mexicano, the world’s largest franchise bottler for Coca-Cola products, currently carries a Zacks Rank #2 (Buy).

The Zacks Consensus Estimate for FMX’s current financial-year earnings indicates growth of 41.5% from the year-earlier actuals. The consensus estimate for current year sales indicates a decline of 3.6% year over year.