Constellation Brands (STZ) Beats Q4 Earnings But Warns of a Tough Year Ahead

TLDR

• Constellation beat Q4 earnings estimates ($1.90 vs $1.71 expected) but FY27 guidance came in below Wall Street forecasts
• Full-year FY27 EPS guidance of $11.20–$11.90 missed analyst estimates of $12.44
• Beer sales rose 1% in Q4; wine and spirits sales collapsed 58% to $194.2 million
• Company is targeting $200M+ in annual cost cuts by fiscal 2028
• Incoming CEO Nicholas Fink takes over April 13, replacing retiring Bill Newlands

Constellation Brands beat fourth-quarter earnings expectations, but investors quickly shifted focus to a disappointing outlook for fiscal 2027, sending the stock lower.

For Q4 ended Feb. 28, the company posted EPS of $1.90 against the $1.71 analysts had expected. Net sales came in at $1.92 billion, down 11% year-over-year but above the $1.84 billion consensus estimate.

The beat wasn’t enough to offset the guidance miss. Constellation guided FY27 EPS to $11.20–$11.90, well below the Wall Street estimate of $12.44. The company also pulled its FY2028 estimates entirely, citing an uncertain macroeconomic environment.

Constellation Brands, Inc., STZ

Beer sales for Q4 came in at $1.73 billion, a modest 1% increase. Shipment volumes rose 1.1%, helped by favorable pricing, though that was partially offset by an unfavorable product mix.

Wine and spirits told a very different story. Sales in that segment dropped 58% to $194.2 million, driven by a 72.9% decline in shipment volumes. The company pointed to brand divestitures, changes in distributor contracts, and strategic pricing decisions as the key drivers.

For full-year fiscal 2026, Constellation reported EPS of $11.82 on net sales of $9.14 billion, down 10% from the prior year but above its own guidance range of $11.30–$11.60.

Pressures Across the Business

Demand for beer, wine, and spirits has been soft for several years. Economic uncertainty has kept consumers away from bars and restaurants, while a broader shift toward healthier habits has also weighed on alcohol sales industry-wide.

Constellation has felt particular pressure from weaker spending among Hispanic consumers, who make up roughly half of its beer customer base. Shifting immigration policies have weighed on sentiment within that group during fiscal 2026.

In the first three quarters of fiscal 2026, beer sales fell 4% year-over-year. Organic wine and spirits sales, stripping out the impact of divestitures, shrank 16% over the same period.

Bank of America reiterated an Underperform rating on STZ, saying they expect a negative reaction in the stock. Morgan Stanley’s Dara Mohsenian described the guidance as “seemingly conservative,” adding the stock would likely give up some of its recent relative outperformance.

Cost Cuts and Leadership Change

Constellation has been pushing into faster-growing categories, including hard seltzers and non-alcoholic drinks. It also launched an organizational review last year, with a target to cut annual costs by more than $200 million by fiscal 2028.

On the leadership front, Nicholas Fink — a board member since 2021 — officially takes over as President and CEO on April 13. Bill Newlands, who has held the role since 2019, will retire but remain as a strategic advisor during the transition period.

Some analysts see room for optimism heading into summer. Roth Capital Partners noted that Constellation’s brands have been selling faster at retail in recent weeks, and the World Cup could provide a tailwind for beer sales.

STZ has gained 8.9% year-to-date but remains down about 18% over the past 12 months.

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