Constellation Brands (STZ) Q3 2026 earnings summary

Executive summary

• Q3 FY26 net sales declined 10% year-over-year to $2.22B, mainly due to divestitures and lower shipment volumes, but only 2% on an organic basis.

• Operating income was $692M, down 13% year-over-year; comparable operating income was flat at $739M.

• Reported EPS was $2.88, down 15% year-over-year; comparable EPS was $3.06, down 6%.

• The Beer Business gained dollar and volume share in U.S. tracked channels, with strong performance from Pacifico and Victoria.

• Distribution growth and premiumization remain key opportunities, despite macro pressures, especially among Hispanic consumers.

Financial highlights

• Net income attributable to shareholders was $503M, down 18% year-over-year; nine-month net income rose 405% due to absence of prior goodwill impairment.

• Q3 beer margins were strong due to cost savings, pricing actions, and a favorable depreciation benefit; gross margin for beer segment at 52.9%.

• Operating cash flow for FY26 is targeted at $2.5B–$2.6B; free cash flow at $1.3B–$1.4B.

• Dividend of $1.02 per share declared; $824M in share repurchases fiscal YTD.

• Q3 capital expenditures were $246M, YTD $656M, mainly for beer brewing capacity expansion.

Outlook and guidance

• FY26 comparable EPS guidance affirmed at $11.30–$11.60; reported EPS guidance updated to $9.72–$10.02.

• Beer net sales expected to decline 2%–4%; operating income to decline 7%–9%.

• Wine & Spirits organic net sales expected to decline 17%–20%; operating income to decline 97%–100%.

• Management expects continued pressure from subdued consumer demand, inflation, and tariffs, but remains committed to margin expansion and cash flow growth.

• More detailed guidance for FY 2027 and beyond will be provided in April, reflecting worsened macroeconomic conditions.