Constellation Brands 2026 Q3 Earnings EPS Surpasses Estimates Despite 17% Net Income Drop

Constellation Brands (STZ) reported fiscal 2026 Q3 earnings on January 7, 2026, with adjusted EPS of $3.06, exceeding analyst estimates of $2.67 by $0.39. Revenue of $2.22 billion, though down 9.8% year-over-year, outperformed the $2.17 billion consensus. The company revised its FY 2026 guidance downward, narrowing the EPS range to $9.72–$10.02 from $9.86–$10.16.

Revenue

Constellation Brands reported total revenue of $2.22 billion for Q3 2026, a 9.8% decline from $2.46 billion in the prior year. The Beer segment accounted for the lion’s share, generating $2.01 billion, while Wine and Spirits combined contributed $213.10 million. Within Spirits, standalone revenue fell to $38.60 million, and Wine sales totaled $174.50 million. Consolidated net sales aligned with the reported revenue figure, reflecting a challenging operating environment for the company’s premium beverage categories.

Earnings/Net Income

Earnings per share (EPS) fell 15.3% year-over-year to $2.88, and net income declined 17.0% to $522.20 million, down from $629.10 million in 2025 Q3. While the adjusted EPS beat estimates, the core earnings contraction underscores pressure on profitability despite outperforming beer category growth.

Price Action

The stock experienced mixed post-earnings performance. Shares edged down 1.83% during the latest trading day but gained 0.26% over the week and 1.78% month-to-date. The EPS beat of $0.39 likely bolstered short-term sentiment, though the revenue decline and guidance revision tempered optimism.

CEO Commentary

Bill Newlands, President and CEO, emphasized the company’s resilience in a “challenged” market, highlighting beer business gains in U.S. tracked channels and disciplined capital allocation. The CEO cited $220 million in share repurchases and modular brewery expansions. CFO Garth Hankinson noted a 3.0X net leverage ratio and a 30% dividend payout ratio, underscoring shareholder returns and cost-saving efforts.

Guidance

Constellation Brands updated its FY 2026 guidance to reflect a narrower EPS range of $9.72–$10.02, below the previous $9.86–$10.16. Beer net sales are expected to decline 2%–4%, while Wine and Spirits face a 17%–20% organic drop. Operating cash flow targets remain at $2.5–$2.6 billion, with free cash flow projected at $1.3–$1.4 billion. Capital expenditures are forecasted at $1.2 billion, including $1.0 billion for Mexico beer operations. The board also declared a $1.02 quarterly dividend per Class A share.

Additional News

Recent developments include a $1.02 quarterly dividend declaration for Class A shares, signaling continued shareholder returns. The company also announced $220 million in share repurchases during Q3, reflecting confidence in capital allocation. Analyst ratings remain mixed, with Needham and Goldman Sachs issuing “Buy” ratings, while B of A Securities downgraded to “Underperform.” Institutional investors showed divergent activity, with major funds like Capital World Investors reducing holdings by 43.3%, while Ameriprise Financial increased its stake by 76.7%.

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