Constellation Brands Q1 Results Beat on EPS
Constellation Brands Q1 results showed EPS and margin strength amid softer revenue and volumes, focusing on Modelo, Corona and the affirmed FY2027 guide.
KEY TAKEAWAYS
- GAAP EPS rose 31.0% to $3.8 while net sales fell 3.0% to $2.4 billion.
- Beer drove profits: beer net sales $2.3 billion and a 39.0% operating margin with dollar share gains.
- Company affirmed FY2027 comparable EPS $11.2-$11.9 and 32.0%-33.0% operating margin guidance.
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Constellation Brands, Inc. (NYSE: STZ) reported first-quarter fiscal 2027 results on June 30, 2026, delivering an earnings-per-share beat and margin expansion despite softer revenue and volumes late in the quarter amid higher gas prices and persistent inflation.
Fiscal Q1 Results and Profitability
For the quarter ended May 31, 2026, Constellation’s Form 8-K showed net sales of $2.43 billion, down 3% year-over-year. GAAP diluted earnings per share rose 31% to $3.79, while comparable EPS increased 7% to $3.43, both exceeding consensus estimates. Operating income grew 18% to $845.3 million, and the reported operating margin expanded to 34.7%, with a comparable margin of 34.3%.
The filing reported operating cash flow of $661.8 million and free cash flow of $484.6 million. Net income attributable to Constellation Brands was $653.8 million. The board declared a quarterly cash dividend of $1.03 per share of Class A common stock, payable August 13.
Beer Strength Amid Consumer Headwinds
Beer remained the primary driver of revenue and profitability. The filing showed beer net sales of $2.28 billion, up 2% year-over-year, with a segment operating margin of 39.0%. Constellation continued to gain dollar share in U.S. tracked channels, with multiple brands among the top gainers, supporting Modelo and Corona and lifting the company’s beer market share.
Wine and spirits net sales fell 47% to $149.2 million, largely due to 2025 wine divestitures. On an organic basis, however, net sales rose 8% and depletions—shipments to distributors and retailers—increased 6.6%.
Management attributed weakening food and beverage volume trends to higher gas prices layered on years of inflation, noting volumes softened as the quarter progressed. Despite this, the company affirmed fiscal 2027 guidance, projecting GAAP EPS between $11.50 and $12.20 and comparable EPS between $11.20 and $11.90. It expects organic net sales growth of (1)% to 1%, an operating margin of 32% to 33%, and free cash flow of $1.6 billion to $1.7 billion.
Constellation is scheduled to host a conference call on July 1, 2026, to discuss the quarter and outlook, with webcast and investor-relations details available on its website.
