STZ Earnings Preview: Can Constellation Brands leverage growing beer sales?

Constellation Brands, Inc. (NYSE: STZ) has effectively navigated challenges like cautious consumer spending and declining demand for its wine and spirits brands by capitalizing on the sustained growth in the beer segment. The company owns some of the top brands and is expanding its brewery network to meet the high demand.

It is estimated that the brewer’s fourth-quarter earnings edged up to $2.27 per share from $2.26 per share in the comparable quarter of fiscal 2024, excluding one-off items. On average, analysts following the company forecast net sales of $2.13 billion for the February quarter, which is broadly in line with the sales it generated in the year-ago quarter. The Q4 2025 report is scheduled for release on Wednesday, April 9, at 5.25 pm ET.

The Stock

After falling to a four-and-half-year low last month, the company’s stock is struggling to regain strength. In the past year, the value has shrunk by 32%. Trading sharply below its 12-month average value, the stock is relatively cheap now. Meanwhile, STZ remains a favorite among long-term investors due to the company’s consistent financial performance, resilience, and healthy dividend payouts.

In the November quarter, Constellation Brands’ net sales remained broadly unchanged at $2.46 billion. Third-quarter net income grew 21% to $616 million, and earnings per share rose 23% to $3.39. At $3.25 per share, comparable earnings were flat year-over-year. Both sales and the bottom line missed Wall Street’s expectations. The continued upswing in beer sales, which account for more than 80% of total revenue, offset a 14% drop in the Wine and Spirits segment.

Guidance

A few months ago, the management said it expects organic sales to grow between 2% and 5% in fiscal 2025. Earnings per share, on a reported basis, are expected to be between $3.90 and 4.30. The forecast for full-year comparable earnings is between $13.40 per share and 13.80 per share. A general cutback on discretionary spending and consumers’ value-seeking behavior has been a drag on sales and profitability, lately.

“We continue to invest behind the momentum of our brands, drive operational efficiencies, maintain cost discipline, and provide strong cash generation while still executing against our capital allocation priorities as we have done for the last several years. We will continue to closely monitor the subdued spend and value-seeking trends we have seen develop across our consumer base and the economic drivers influencing that behavior as well as other possible macro shifts, particularly any changes arising from potential tariff policies,” said the company’s CEO Garth Hankinson in the Q3 2025 earnings call.

Outlook

While Constellation Brands’ highly popular brands like Modelo and Corona give it a competitive advantage, the company faces a threat from the new import tariffs because it operates multiple breweries in Mexico. A full-fledged trade war would negatively impact the business, particularly as US beer companies struggle with declining consumption and increasing competition for market share.

Constellation Brands’ stock has lost 16% in the past three months. It has been trading flat after suffering a sharp fall in the early days of the year. The shares traded slightly lower on Friday afternoon.