Constellation Brands Inc. (NYSE: STZ), a leading producer of beer and spirits, had a soft start to fiscal 2026, with first-quarter sales declining across key businesses — particularly in the core Beer segment. Recent performance has been pressured by shifting customer preferences and macroeconomic headwinds, including reduced discretionary spending and rising costs linked to new tariffs. Some of the company’s popular beer brands are imported from Mexico, including Corona, Modelo, and Pacifico.
Estimates
The consensus estimate for second-quarter earnings, adjusted for special items, is $3.42 per share, which represents a sharp decline from the prior-year quarter when the company earned $4.32 per share. Analysts forecast revenues of $2.48 billion, compared to $2.92 billion in Q2 2025. The company is expected to publish the results on October 6, after markets close.
After entering a rough patch mid-year, Constellation shares have struggled to recover. The stock has declined around 28% in the past six months, underperforming the broader market. In the past year, the value nearly halved, placing STZ among the worst-performing stocks in the consumer staples sector. Although the stock appears undervalued based on its metrics, investors should defer entry until fundamental or technical indicators confirm a reversal of the trend.
Losing Fizz
In the first quarter of FY26, net sales declined 6% annually to $2.51 billion. Both the Beer and Wine & Spirits business segments experienced a decline in demand compared to last year. The weak top-line performance translated into a 10% fall in comparable earnings to $3.22 per share, on a year-over-year basis. Net income attributable to the company was $516.1 million or $2.90 per share in Q1, vs. $877 million or $4.78 per share last year. Both sales and profit fell short of Wall Street’s expectations.
From Constellation Brands’ Q1 2026 Earnings Call:
“On the margin front, we feel good about our ability to deliver margins in line with what we laid out in April, specifically to the incremental tariff that went into effect in June. To be clear, that did not impact our Q1. Going forward, we think that the impact of that is going to be roughly $20 million. As a reminder, what was announced earlier in the year was an impact of about $30 million. It’s obviously less for us, given that it’s one quarter into the year, or the incremental is less for us because we’re one quarter into the year.”
Road Ahead
The company said it expects total organic sales to be down 2% to up 1% in fiscal 2026. On a comparable basis, full-year earnings per share are expected to be between $12.60 and $12.90. Unadjusted earnings per share are forecast to be in the range of $12.07 to $12.37. The guidance includes the potential impact of new import tariffs and evolving macroeconomic conditions, like shifts in employment and inflation. At the same time, there has been a shift in beer consumption habits, especially among young customers, and the broader trend of moderation presents a challenge to Constellation.
The average price of the company’s stock for the last 52 weeks is $190.57. After experiencing high volatility throughout the week, the shares traded slightly lower on Friday afternoon.
