Constellation Brands Share Rise Despite Weak Earnings: Retail Sentiment Drops

Constellation Brands (STZ) reported first-quarter results below Wall Street expectations on Wednesday. However, some positive comments on tariff headwind mitigation and an unchanged full-year outlook lifted shares.

Constellation stock gained 4.5% to $173.87, its best intraday gains in nearly three months. Shares are down 21.3% year-to-date.

CEO Bill Newlands said Constellation "continued to face softer consumer demand largely driven by what we believe to be non-structural socioeconomic factors.

Earlier this week, Bank of America downgraded peer Molson Coors Beverage's (TAP) shares, stating that it expects U.S. beer volumes to shrink by 4% next year, a steeper decline than its earlier prediction of a 1% decrease.

Q1 revenue at Constellation, known for Corona beer and Robert Mondavi wine, dropped 6% to $2.52 billion, slightly below analysts' expectations. Earnings per share were $3.22, also below the estimate.

Management stated that the company anticipates an approximately $20 million impact from aluminum tariffs for the remainder of its fiscal year, down from its earlier expectation of $30 million. Despite that, the company expects to maintain its targeted margin growth.

On Stocktwits, the retail sentiment for the company shifted to 'bullish' from 'extremely bullish' the previous day.

A user said, "The exuberance (in the stock) seems a bit irrational," and backed it up by saying the company faces "declining market share, declining sales, declining profit, 25% tariff on Mexican beer, customer base being deported."

Following the results, Bank of America maintained its 'Neutral' rating on STZ stock and raised the price target by $2 to $182.

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