US alcoholic drinks group Constellation Brands (STZ) served up forecast-beating Q4 results and called out encouraging momentum across its beer and wine and spirits businesses.
However, FY27 earnings guidance came in shy of Wall Street expectations, sending the unloved stock lower on Wall Street.
| Share price: $150.3 (-2.3%) | Market cap: $26bn |
| PE: 24x | Yield: 2.7% |
The Corona Extra-to-Modelo Especial beer maker also rattled investors by withdrawing FY28 guidance due to the uncertainties facing the sector.
Beer delivers a beat
For the quarter to February 2026, Constellation Brands delivered adjusted earnings per share of $1.90 versus the $1.72 Wall Street analysts expected.
The firm saw ‘subdued’ demand across its categories last year, and Q4 revenue was down 11% year-on-year at $1.92 billion.
But this proved better than the $1.88 billion analysts were calling for. Market share gains in the beer category lent support and partially offset a slump in wine and spirits sales.
Cloudy outlook
‘Looking ahead to fiscal 2027, while we are encouraged by the momentum displayed during the fourth quarter across our Beer and Wine & Spirits businesses,’ said the company.
‘We expect the operating environment to remain dynamic given the evolving socioeconomic backdrop and limited near-term visibility.’
For FY27, Constellation Brands guided for earnings per share of between $11.20 and $11.90, below the $12.36 Wall Street expected.
‘As we look ahead to fiscal 2027, we expect consumers will continue to navigate a shifting macroeconomic environment, but we remain encouraged by the momentum we saw in the fourth quarter,’ said outgoing CEO Bill Newlands.
Back in January, Constellation’s downbeat Q3 results revealed a 10% decline in organic sales to $2.2 billion and an 18% slump in net income to $503 million.
Constellation Brands is a high-quality company with iconic brands and pricing power. It also has a strong track record of returning cash to shareholders via buybacks and dividends.
Nevertheless, we would avoid the stock for the time being.
The shares are flashing red over one and five years for wider sector and company-specific reasons and new CEO Nicholas Fink has a full in-tray.
The headwinds facing his charge range from tariffs and tighter alcohol regulation to the impact of weight-loss drugs on the sector.
Hispanic consumers, who drive roughly 50% of Constellation’s top-selling Modelo and Corona volumes, are also pulling back on spending due to economic concerns and immigration worries.
Read the press release here: https://ir.cbrands.com/financial-information/financial-results
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