Constellation Brands (STZ) Stock: What Wall Street Expects from Earnings Tuesday

TLDR

• Constellation Brands reports fiscal Q1 earnings Tuesday, with analysts expecting sales to fall 5% to $2.39 billion and EPS to dip 1% to $3.19.
• Beer sales grew 1% in the prior quarter, the first growth in several quarters, but beer operating margin slid to 33.2% from 36.6%.
• Wells Fargo cut its price target to $170 from $185 on Monday but kept an overweight rating, implying roughly 18.8% upside.
• The stock traded near $141-143 recently, down about 2.2% Monday and well below its 52-week high of $178.13.
• Constellation is selling off underperforming wine brands and targeting more than $200 million in annual cost savings by fiscal 2028.

Constellation Brands stock traded near $143 on Monday, down 2.2% and sitting well below its 52-week high of $178.13. The drinks maker reports fiscal first-quarter earnings after the close on Tuesday, and investors want one thing above all: proof that beer is finally pulling its weight again.

Constellation Brands, Inc., STZ

Wall Street isn’t expecting a blowout quarter. Analysts polled by FactSet see sales falling 5% year over year to $2.39 billion, with earnings per share dipping about 1% to $3.19.

The backdrop here matters. Alcohol demand has been soft for years as shoppers tighten their belts. Constellation has it tougher than most, since Hispanic consumers make up roughly half of its beer customer base, and affordability worries plus immigration enforcement concerns have weighed on that group’s spending.

There was a glimmer of hope last quarter, though. In the fiscal fourth quarter ended in February, beer sales rose about 1% from a year earlier, snapping a long losing streak.

Beer Sales Show Signs of Life

Management pointed to early signs of recovery among Hispanic shoppers. Modelo kept grabbing market share, and Victoria beer has been picking up younger drinkers between 21 and 25.

That’s the good news. The less good news is margins.

Beer operating margin fell to 33.2% in the fourth quarter, down from 36.6% a year earlier. Lower sales volumes make fixed costs harder to spread, and tariffs on aluminum cans haven’t helped either.

Constellation has been busy trimming the fat elsewhere too. It’s offloaded a chunk of its mainstream wine brands to focus on a more premium lineup, while pushing further into imported Mexican beer, craft spirits, and low- and no-alcohol drinks as younger consumers drink less overall.

The company is chasing more than $200 million in annual cost savings by fiscal 2028 to help offset the margin pressure.

Analysts Are Split But Leaning Positive

Wall Street’s take on the stock has been a mixed bag lately. Wells Fargo trimmed its price target from $185 to $170 on Monday but kept its overweight rating, still pointing to about 18.8% upside from current levels.

Other firms have gone different directions. Bank of America cut its target to $152 and rates the stock underperform, while Barclays raised its target to $170 with an equal weight rating. Jefferies and Deutsche Bank both sit at hold, with targets of $157 and $155 respectively.

Across the board, MarketBeat data shows a consensus Moderate Buy rating with an average price target of $172.21. One analyst rates it Strong Buy, eleven say Buy, eight say Hold, and two say Sell.

Constellation’s last earnings report, back on April 8th, actually beat expectations. The company posted $1.90 EPS against a $1.71 estimate, even though revenue was down 11.3% year over year.

On the insider front, EVP James O. Bourdeau sold 4,407 shares in mid-May at an average price of $143.24, trimming his stake by nearly a third. Institutional investors still own the bulk of the company, holding 77.34% of outstanding shares between them.

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