To The Moon

$Constellation(STZ)$ is scheduled to report its financial results for the first quarter ended May 31, 2025, on Tuesday, 01 July 2025, after the close of the U.S. markets.

Earnings Per Share (EPS): Analysts expect a decline in EPS year-over-year. The consensus estimate is around $3.29 to $3.40 per share, down from $3.57 per share in the prior-year period (Q1 Fiscal Year 2025). The most accurate estimate is slightly lower than the Zacks Consensus Estimate, suggesting a bearish sentiment among some analysts.

Based on the earnings per share (EPS) consensus estimate from TradingView, we are looking at $3.31 per share.

Revenue: Wall Street anticipates quarterly revenue of approximately $2.56 billion, compared to $2.66 billion a year earlier. This represents an expected year-over-year decrease of about 3.2% to 4%.

Constellation Brands (STZ) Last Neutral Earnings Call Saw Share Price Gained 0.7%

Constellation Brands (STZ) reported its Q4 2025 earnings on April 9, 2025. After the earnings report on 09 April 2025, STZ stock closed at $183.40, a gain of +7.3% on that day. On 10 April 2025, the stock continued to rise by +0.7%, closing at $184.75.

The earnings call highlights Constellation Brands' achievements in sales growth, brand health, and strategic fiscal management, while addressing challenges posed by economic conditions, revised growth forecasts, and consumer sentiment. The company remains committed to shareholder returns and operational efficiency, though uncertainty in the macroeconomic environment poses risks.

Constellation Brands (STZ) Guidance

During the Constellation Brands Q4 Fiscal Year 2025 earnings call, the company provided guidance for the upcoming fiscal years. For fiscal year 2026, they anticipate a beer net sales growth rate between 0% to 3% and an operating income growth rate of 0% to 2%. For fiscal years 2027 and 2028, the beer net sales growth is expected to be between 2% to 4%, with operating margins projected to be approximately 39% to 40%. The company is also targeting around $9 billion in operating cash flow and $6 billion in free cash flow from fiscal 2026 to 2028.

These projections take into account the expected impact of recently announced tariffs by the U.S. and Canadian governments, which will particularly affect their Wine and Spirits Business. Constellation Brands remains focused on driving distribution gains, disciplined innovation, and incremental marketing investments to support their Beer Business, while also implementing restructuring actions expected to yield over $200 million in net annualized cost savings by fiscal 2028. Additionally, the company has a new three-year $4 billion share repurchase authorization as part of its disciplined capital deployment framework.

Key Factors to Watch

Beer Business Performance: Constellation Brands' beer segment, which includes brands like Modelo Especial and Corona Extra, is the primary revenue driver, accounting for over 84% of sales. In Q1 2025 (reported July 3, 2024), the beer business saw strong growth in both sales and operating income. Investors will be looking for continued momentum here.

The medium-term beer sales growth forecast has been revised downward from 7%-9% to 2%-4% for fiscal 2027 and 2028, reflecting uncertainty in consumer sentiment and economic conditions.

Wine and Spirits Division: This segment has faced challenges, with sales declining in previous quarters. The company has been divesting non-core assets in this area. Any improvements or further headwinds in this division will be closely scrutinized.

Despite a softer consumer demand backdrop, Constellation Brands delivered enterprise net sales growth, realized substantial comparable operating margin improvement, and achieved double-digit comparable EPS growth in fiscal year 2025.

Guidance for Fiscal Year 2026: Management's updated outlook for the full fiscal year 2026, including projections for net sales growth, operating income, and EPS, will be crucial for investor sentiment. In Q4 2025, management had already dialed back its medium-term revenue growth forecast to 2%-4% from 6%-8%.

Cost Management and Margins: The company has implemented cost-cutting initiatives that helped lift operating income in previous quarters. The impact of these initiatives on Q1 2026 operating margins will be important.

Constellation Brands is targeting approximately $9 billion in operating cash flow and $6 billion in free cash flow from fiscal 2026 to 2028, with ongoing investments in brewery development and expansions.

Expected restructuring actions in the Wine and Spirits Business are anticipated to yield over $200 million in net annualized cost savings across the enterprise by fiscal 2028.

Macroeconomic Factors: Broader economic conditions, consumer spending habits on alcoholic beverages, and potential impacts from tariffs (especially given that over 98% of sales come from the U.S.) could influence results.

Constellation Brands gained over 10% in share of space during last year's resets, and all brand health metrics remain strong, with increases in aided awareness and consideration for key brands such as Modelo, Corona, and Pacifico.

The Hispanic consumer, who represents a significant portion of Constellation's Beer Business, has shown concern about higher prices, immigration issues, and job losses, leading to reduced spending on social gatherings and beer consumption.

The guidance includes the impact of tariffs announced by the U.S. and Canadian governments, affecting aluminum cans for the Beer Business and certain wine brands, potentially impacting costs and margins.

The socioeconomic environment is expected to remain challenging, with no significant improvements anticipated over the forecast period, impacting consumer spending and sentiment.

Share Repurchases and Capital Deployment: Constellation Brands has expressed a commitment to disciplined capital deployment, including share repurchases and dividends. Any updates on these plans will be of interest.

The company remains committed to a disciplined capital deployment framework, including a 30% dividend payout ratio and a new three-year $4 billion share repurchase authorization.

Historical Context and Analyst Sentiment

Recent Earnings History: Constellation Brands has a mixed record of beating or missing analyst expectations. In Q4 2025, the company beat EPS estimates but missed on revenue. Over the last four quarters, it has beaten consensus EPS estimates three times.

Analyst Ratings: Several analysts have recently maintained "Overweight" or "Buy" ratings, though some have slightly lowered their price targets. The consensus rating for STZ is "Outperform," with an average one-year price target indicating potential upside.

Stock Reaction Post-Earnings: Historically, STZ has fallen after earnings announcements about 60% of the time, with a median one-day drop of 3.3%.

Constellation Brands (STZ) Price Target

Based on 23 analysts from Tiger Brokers app offering 12 month price targets for Constellation Brands in the last 3 months. The average price target is $211.80 with a high forecast of $300.00 and a low forecast of $170.00. The average price target represents a 31.29% change from the last price of $161.32.

Technical Analysis - Exponential Moving Average (EMA)

Though STZ have been giving some potential buy points, but leading into the earnings, the negative momentum and declining share price would likely be on the investors mind, whether Constellation could turn around with good progress from its restructuring action in the Wine and Spirits Business.

So a good positive guidance and increase in its margins with good progress in restructuring action would push the share price higher post earnings.

Summary

While Constellation Brands' beer portfolio remains a strong asset, investors will be closely watching for any signs of continued weakness in the wine and spirits segment and how the company's overall guidance for the fiscal year stacks up against analyst expectations, especially considering the anticipated year-over-year decline in both EPS and revenue for Q1 Fiscal Year 2026.

Appreciate if you could share your thoughts in the comment section whether you think Constellation could provide good progress report from the restructuring actions in the Wine and Spirits Business.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.