Constellation Brands (STZ) Earnings Preview

Constellation Brands (STZ) reports earnings after the bell, one of the only notable earnings this week. Zacks expects 3Q26 EPS to be $2.65 (-18.5% vs last year) on revenue of $2.18 billion (-11.7% vs last year.)

Alcohol companies across the board have struggled over the last few years – Americans are simply drinking less, with younger consumers especially abstaining or finding alternatives such as cannabis.  

In terms of beer, Constellation, which makes Modelo and Corona, has a strong Hispanic consumer base – Barron’s says they account for about half of sales – but their spending is eroding as well. In its last report, it noted beer sales were down 7% largely because of softer spending from that bloc. 

Constellation has divested some of its wine businesses to double-down on premium options; both wine and spirits have struggled in recent years. The move is recent and we haven’t yet seen the outcome: investors may want to watch that space. Premium brands have been a winner across categories, from airlines to retail.

Outside of traditional products, it has also been investing in non-alcoholic and cannabis-based beverages, but they remain a small part of the business. Cannabis-based beverages are potentially under legislative threat, but even if they were banned, it is unlikely consumers would flock back to alcohol. Price and health concerns have also created the shift, and neither of those pressures look like they’re going anywhere.

Despite this seemingly dismal outlook, over half of analysts polled by FactSet have a Buy rating on shares, which are down -35% since last year. With expectations low, a beat could buoy market spirits. The options market implies a +/- $7.50 move, or around 5%.

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