STZ Stock Falls As Modelo And Corona Lose Volume, Full-Year Profit Outlook Holds

• For the fiscal second quarter ended August 31, comparable earnings were $3.74 a share, up 3% from $3.63 and ahead of estimates near $3.60.
• The company reaffirmed comparable fiscal 2027 earnings of $11.20 to $11.90 a share, against last year’s $11.82.
• Constellation on Tuesday also announced the acquisition of SpikedAde, a vodka-based brand in the emerging market of spirit-based, ready-to-drink (RTD) alcohol beverages.

Shares of Constellation Brands (STZ) fell in after-hours trading on Tuesday after the beer maker beat quarterly estimates but left its full-year profit outlook unchanged, with its two biggest brands still losing volume.

The stock dropped as much as about 5% shortly after the close. It had finished the regular session up 2% at $115.67.

Modelo And Corona Still Lost Volume

For the fiscal second quarter ended August 31, comparable earnings were $3.74 a share, up 3% from $3.63 and ahead of estimates near $3.55, according to data from Fiscal AI. Net sales rose 6% to $2.63 billion, above an expected $2.54 billion. Comparable operating income rose 1% to $897 million.

The beer business grew net sales 5% to $2.47 billion on a 5.5% rise in shipments, the cases Constellation sent to distributors. Depletions, the cases those distributors sold on to stores and bars, fell 0.6%. Modelo Especial depletions were down about 2% and Corona Extra about 5%, partly offset by Pacifico, Victoria, and the Modelo Chelada brands, up about 19%, 15%, and 5%, respectively. An extra selling day was largely offset by the Labor Day shift.

Beer operating margin fell 160 basis points to 39% as higher marketing and overhead spending more than offset lower tariff costs. Wine and spirits net sales rose 17% to $159 million, depletions rose 10.2%, and the unit swung to an operating profit of about $6 million from a loss of about $20 million.

Chief executive Nicholas Fink said the portfolio “continued to resonate with consumers,” that sharper execution and higher investment were showing “early returns” in share gains, and that Constellation was the number-one dollar share gainer in beverage alcohol in the quarter.

In tracked U.S. stores, its beer sales held up better than the beer aisle overall, beating the category by 4 percentage points, and no beer company gained more ground in dollars or cases. Modelo remained the top-selling beer by dollars. Pacifico moved into the top 10.

What STZ Management Is Forecasting

The company reaffirmed comparable fiscal 2027 earnings of $11.20 to $11.90 a share, against last year’s $11.82. Organic net sales, and beer net sales, are expected to be down 1% to up 1%. Beer operating margin is forecast at 37% to 38% for the year. Operating cash flow stays at $2.4 billion to $2.5 billion, and free cash flow at $1.6 billion to $1.7 billion. Over six months, free cash flow was $1.1 billion.

Chief financial officer Garth Hankinson said first-half cash flow let the company hold comparable net leverage near 3 times and return more than $800 million through buybacks and dividends, including $530 million of repurchases through September. The board declared a $1.03 quarterly dividend, payable November 13.

STZ's SpikedAde Deal

Constellation on Tuesday also announced the acquisition of SpikedAde, a vodka-based brand in the emerging market of spirit-based, ready-to-drink (RTD) alcohol beverages inspired by sports drink flavors. It paid $75 million at closing for full ownership, plus up to $278 million over five years if the brand hits targets. The company said the deal fits a plan to expand into new demand spaces and does not change the fiscal 2027 outlook. The acquisition is small next to a beer business still waiting for Modelo and Corona to stop shrinking.

How Did STZ Retail Traders React?

On Stocktwits, retail sentiment around STZ stock jumped from bullish to extremely bullish territory over the past 24 hours, while message volume increased from normal to high levels.

Fire sale on this, a user wrote, noting that the earnings were good and the stock is trading near its 52-week lows. “I wouldn’t be surprised if this goes back to $150 by end of year,” they added.

Another user noted the pullback on drinking overall. Polling firm Gallup put the share of Americans who drink at 54% in August, a low since 1939.

STZ stock has fallen 16% year-to-date. 

Read More: NLST Stock Jumps 18% After Micron’s $600M License Deal — Retail Now Awaits SK Hynix

For updates and corrections, email newsroom[at]stocktwits[dot]com.