Beer, wine, and spirits company Constellation Brands (NYSE: STZ) reported Q4 CY2025 results exceeding the market’s revenue expectations, but sales fell by 9.8% year on year to $2.22 billion. Its non-GAAP profit of $3.06 per share was 16.2% above analysts’ consensus estimates.
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Constellation Brands (STZ) Q4 CY2025 Highlights:
- Revenue: $2.22 billion vs analyst estimates of $2.16 billion (9.8% year-on-year decline, 2.9% beat)
- Adjusted EPS: $3.06 vs analyst estimates of $2.63 (16.2% beat)
- Adjusted EBITDA: $861.7 million vs analyst estimates of $790.1 million (38.8% margin, 9.1% beat)
- Management reiterated its full-year Adjusted EPS guidance of $11.45 at the midpoint
- Operating Margin: 31.1%, down from 32.2% in the same quarter last year
- Organic Revenue fell 2% year on year vs analyst estimates of 4.4% declines (243.4 basis point beat)
- Market Capitalization: $25.75 billion
StockStory’s Take
Constellation Brands delivered a fourth quarter that exceeded Wall Street’s revenue and non-GAAP profit expectations, despite a notable year-over-year sales decline. Management attributed the quarter’s performance to successful pricing actions and ongoing cost savings initiatives, which helped offset headwinds from lower beer volumes, tariffs, and logistics costs. CEO Bill Newlands highlighted Pacifico’s continued growth and the company’s resilient distribution strategy as key contributors to maintaining brand health amid challenging market conditions.
Looking ahead, Constellation Brands’ guidance centers on disciplined capacity expansion, continued investment in core brands, and navigating ongoing cost headwinds. Management emphasized the importance of modular brewery buildouts, careful capital allocation, and adapting to evolving consumer behaviors, particularly among Hispanic consumers. CFO Garth Hankinson cautioned that macroeconomic volatility and input cost inflation remain uncertainties, but management expects opportunities from events like the World Cup and evolving pricing strategies to support future performance.
Key Insights from Management’s Remarks
Management cited brand momentum, disciplined pricing, and targeted cost controls as primary drivers of the quarter’s performance, while acknowledging ongoing margin headwinds from tariffs and input costs.
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Pricing actions supported margins: The company’s spring and fall price increases offset some of the volume and cost pressures, with management citing “favorable pricing” as a key factor in margin resilience for the quarter.
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Tariffs and input costs pressured profitability: CFO Garth Hankinson noted that higher aluminum prices and shifting product mix toward aluminum packaging continued to weigh on margins, with these headwinds expected to persist into the next quarter.
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Pacifico’s brand expansion: CEO Bill Newlands pointed to Pacifico’s growth strategy, mirroring Modelo’s west-to-east trajectory, and its increasing resonance with younger consumers as a driver of incremental distribution gains across the U.S.
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Capacity investments remain modular: The company reiterated its commitment to a modular approach in brewery expansions, allowing flexibility in capital expenditure as volume forecasts shift in response to changing demand and macroeconomic factors.
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Distribution gains across key markets: Management highlighted that the beer portfolio gained share in 49 of 50 states, with distribution expansion for Pacifico and Victoria contributing to overall brand health. The Shopper-First Shelf initiative was credited with strengthening retailer partnerships and positioning for further shelf space gains.
Drivers of Future Performance
Management’s outlook is shaped by capacity discipline, evolving consumer dynamics, and the potential for event-driven demand.
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Capacity buildout flexibility: The modular expansion of brewing facilities is designed to match future demand scenarios, allowing the company to adjust capital spending and asset deployment as market conditions evolve.
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Consumer and category volatility: Management remains cautious regarding ongoing pressures among Hispanic consumers, who are a significant demographic for Constellation’s brands. The company is closely monitoring macroeconomic factors, shifting spending patterns, and localized market volatility.
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Event-driven opportunities: Anticipated “beer moments” such as the World Cup are expected to create demand surges, particularly among core consumer segments. Management plans to leverage targeted promotions, media investment, and shelf presence to capitalize on these events.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will watch (1) the pace and effectiveness of modular brewery capacity expansion, (2) the ability to sustain and grow distribution for Pacifico and other key brands, and (3) management’s handling of input cost pressures, especially aluminum and tariffs. Additionally, we will monitor the impact of major sporting events and evolving consumer trends, particularly among Hispanic demographics, on overall demand.
Constellation Brands currently trades at $148.45, up from $140.49 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).
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