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.
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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: $861.4 million vs analyst estimates of $790.1 million (38.8% margin, 9% 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: $26.56 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Constellation Brands’s Q4 Earnings Call
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Bonnie Herzog (Goldman Sachs) asked about the resilience of beer operating margins despite volume declines. CFO Garth Hankinson explained that cost savings and pricing actions offset headwinds, but warned of additional margin pressure from tariffs and depreciation in the coming quarter.
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Nadine Sarwat (Bernstein) inquired about the sustainability of historical beer margins amid a weaker macroeconomic backdrop. Hankinson said future guidance will reflect updated economic conditions and indicated more details would be provided during the next update.
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Lauren Lieberman (Barclays) questioned capital expenditure plans and the modular approach to brewery expansion. Hankinson confirmed flexibility in spend, stating investments will be timed to demand, with long lead times on equipment factored into planning.
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Dara Mohsenian (Morgan Stanley) sought clarity on shelf space gains for the beer portfolio. CEO Bill Newlands responded that distribution remains a top opportunity, citing recent share gains and initiatives like the Shopper-First Shelf to strengthen retailer relationships.
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Filippo Falorni (Citi) asked about the beer pricing environment and recent adjustments to specific brands. Newlands said price changes to Oro and Premier improved trends and that the company remains committed to meeting consumer expectations through price pack architecture.
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 $153.43, up from $140.49 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).
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