Constellation Brands (STZ) shares rose early Wednesday after the beer and wine company reported an unexpected year-over-year increase in its fiscal first-quarter earnings, while revenue came in ahead of Wall Street's estimates.
Adjusted earnings came in at $3.43 per share for the quarter ended May, up from $3.22 the year before, the company said late Tuesday, defying the Street's expectations for a decrease to $3.19. Sales declined 3% to $2.43 billion, but topped the consensus view of $2.39 billion. Organic net sales gained 3%.
The stock was up 2.4% in the most recent premarket activity.
"Despite a discerning and value-conscious consumer environment, we grew enterprise organic net sales and gained share during the first quarter of fiscal 2027," Chief Executive Nicholas Fink said in a statement.
Consumer spending patterns remained "dynamic" throughout the quarter amid persistent inflation and economic uncertainties, Fink said in prepared remarks available on the company's website. While Constellation saw a resurgence in purchasing behavior amid a "more normalized" start to the quarter, financial pressures driven by a significant hike in gasoline prices led to a "more discerning and value-conscious consumer mindset" and a deceleration in beverage volume trends as the period progressed, the CEO said.
Beer revenue increased 2% to $2.28 billion, buoyed by shipment growth of 1.8% and favorable pricing. The division's depletion rate, or the pace at which units are sold to end consumers, edged down 0.3%, as gains in the Pacifico, Victoria and the Modelo Chelada brands were offset by declines in Modelo Especial and Corona Extra.
Sales of wine and spirits dropped 47% to $149.2 million, amid a 64% plunge in shipment volume, reflecting the impact of the divestiture of certain wine and spirits brands in 2025, the company said. The division's depletions rose 6.6%.
For fiscal 2027, Constellation continues to project adjusted EPS to come in between $11.20 and $11.90, while the Street is looking for $11.74. Enterprise organic sales, beer net sales and organic sales in the wine and spirits division are all still pegged to be down 1% to up 1% for the ongoing fiscal year.
"We expect (Constellation Brands) to exhibit better volume performance this year due to improving sentiment among Hispanic consumers, expansion of new pack sizes, new marketing campaigns, the World Cup and improved analytics to help local market execution," RBC Capital Markets said in a note.
The company's fiscal 2027 guidance is "understandably cautious" given the current environment and should be achievable even if conditions worsen, the brokerage said.
