STZ · Q1 2027 Earnings

Cautious

Constellation Brands

Reported June 30, 2026

30-second summary

Q1 net sales fell 3.3% to $2.43B but beat consensus by 0.9% and comparable EPS of $3.43 beat by 5.2%, with beer operating margin printing 39.0% — comfortably above the 37–38% FY27 range and neutralizing the "the cut was too optimistic" risk. But beer depletions ticked back to -0.3% from the +0.6% Q4 inflection, and management held every operational FY27 metric while raising only reported GAAP EPS by $0.40–$0.70 (a mechanical, non-comparable move). The takeaway: margin and cash are on plan, volume stabilization is not confirmed.

Headline numbers

EPS

Q1 FY2027

$3.43

+5.2% vs est.

Revenue

Q1 FY2027

$2.43B

-3.3% YoY

+0.9% vs est.

Gross margin

Q1 FY2027

54.3%

Free cash flow

Q1 FY2027

$0.48B

Operating margin

Q1 FY2027

34.7%

Key financials

Q1 FY2027

Metric	Q1 FY2027	Q1 FY2026	YoY	Q4 FY2026	QoQ
Revenue	$2.43B	$2.52B	-3.3%	$1.92B	+26.7%
EPS	$3.43	$3.22	+6.5%	$1.90	+80.5%
Gross margin	54.3%	50.4%	+390bps	49.6%	+470bps
Operating margin	34.7%	28.4%	+630bps	23.0%	+1170bps
Free cash flow	$0.48B	$0.44B	+9.2%	—	—

Guidance

Company raised FY2027 reported EPS guidance to $11.50–$12.20 (from $11.10–$11.80) while reaffirming comparable EPS and all operational metrics; Q1 results beat both revenue and EPS consensus.

Guidance is issued for both next quarter and the full year. Both may appear below.

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
EPS (GAAP)	FY2027	$11.10 - $11.80	$11.50 - $12.20	+$0.40 - $0.70 at midpoint	Raised
Tax rate	FY2027	~20%	Withdrawn — no replacement	—	Withdrawn

Reaffirmed unchanged this quarter: Comparable EPS (non-GAAP) ($11.20 - $11.90), Operating Cash Flow ($2.4 - $2.5 billion), Free Cash Flow ($1.6 - $1.7 billion), Enterprise organic net sales growth ((1)% - 1%), Beer net sales growth ((1)% - 1%), Wine and Spirits organic net sales growth ((1)% - 1%), Enterprise operating margin (32% - 33%), Beer operating margin (37% - 38%), Wine and Spirits operating margin (5% - 6%)

Segment performance

Q1 FY2027

Segment	Q1 FY2027	Q1 FY2026	YoY
Beer	$2.284B	$2.235B	+2.2%
Wine and Spirits	$0.149B	$0.281B	-47.0%

Platform metrics

Q1 FY2027

Segment	Q1 FY2027	Q1 FY2026	YoY
Beer Shipments	113.3 million 24-pack equivalents	—	—
Beer Depletions Growth	-0.3%	—	—
Wine and Spirits Organic Shipments Growth	7.7%	—	—
Wine and Spirits Depletions Growth	6.6%	—	—

Profitability

Q1 FY2027

Segment	Q1 FY2027	Q1 FY2026	YoY
Beer Operating Margin	39.0%	39.1%	—
Wine and Spirits Operating Margin	-0.7%	—	—
Operating Cash Flow	$662 million	—	—

Other KPIs

Q1 FY2027

Segment	Q1 FY2027	Q1 FY2026	YoY
Shareholder Returns	$400 million (share repurchases and dividends YTD)	—	—

Management tone

Narrative arc: Q2 "FY plan abandoned" → Q3 "April reset telegraphed" → Q4 "±1% stabilization guide" → Q1 FY27 "we grew and gained share."

The press-release language shift is the cleanest tell: last quarter's "we expect the operating environment to remain dynamic given the evolving socioeconomic backdrop and limited near-term visibility" has been replaced by "we grew Enterprise organic net sales and gained share during the first quarter of fiscal 2027" and "we remain well positioned to drive sustainable organic growth while maintaining healthy investment in our brands." Three quarters of cautionary macro framing has given way to an affirmative first-quarter proof point. The Hispanic-consumer caveats and "very hard to say we've hit the bottom" concessions from Q3 are gone from the release copy.

Management's emphasis has shifted from forward defensibility to backward validation. Last quarter's press release led with what could go wrong; this quarter's leads with what did go right ("gained share," "grew organic net sales," "strong free cash flow generation"). The reaffirmed operational guide — every single revenue and margin line held — is being framed as the company delivering against a plan rather than defending a plan under pressure.

The one substantive downshift is what was not said. Tax-rate guidance was silently withdrawn. On a raise-the-GAAP-EPS quarter, management chose not to re-anchor the effective tax rate — either because it's moving and they don't want to commit, or because the raise is tax-driven and disclosing the new rate would make that visible. Either way, the withdrawal is the tone-shift the press release doesn't advertise.

No transcript was available for this print; the analysis above is based on press-release commentary. Q&A tone assessment will resume with the next brief.

Answers to last quarter's watch list

Q1 FY27 beer depletions against the +0.6% Q4 print. Depletions printed -0.3% — back below zero on the easier comp (Q1 FY26 was -2.6%). The FY27 beer net sales guide of (1)% to +1% is not immediately at risk because Q1 shipments were +2%, but shipments running well above depletions means distributor inventory absorbed the delta and Q2/Q3 have to work off that build. This was the load-bearing assumption under the FY27 stabilization thesis and it did not clear the bar.

Resolved negatively

Beer operating margin run-rate against the 37–38% FY27 range. Q1 FY27 beer margin printed 39.0%, only 10bps below Q1 FY26's 39.1% and a full point above the top of the FY27 guide. The concern that the 37–38% cut was itself optimistic is neutralized — margin is holding at the prior year's level despite the operational headwinds management flagged in April. If anything, the FY27 range now looks conservative and the Q4 cut may have been unnecessary.

Resolved positively

Wine & Spirits organic stabilization. Organic shipments +7.7% and depletions +6.6% — well above the FY27 ±1% range on the top-line trajectory. Segment net sales +8% is the strongest print in two years. Operating margin of -0.7% is well below the 5–6% FY guide, so H2 has to carry all the profit, but the top-line stabilization concern is answered.

Resolved positively

Capex disclosure clarity. The press release did not provide an explicit FY27 capex number. The Q1 OCF/FCF gap ($662M − $485M = $177M) annualizes to ~$700M, roughly consistent with the ~$800M implied by the FY guide range but not directly confirmed.

Continue monitoring

Buyback pace under the tighter FCF envelope. $400M YTD in shareholder returns (buybacks + dividends). Against Q1 FY26's ~$530M pace ($306M buybacks alone plus ~$224M dividend equivalent), the pace has slowed — consistent with management defending FCF discipline under the lower FY27 envelope. This is what the tightened FCF guide required, so directionally as expected.

Resolved positively

What to watch into next quarter

Q2 beer depletions returning to positive. The Q1 -0.3% depletions print on shipments of +2% built distributor inventory. For the FY27 (1)% to +1% beer net sales guide to hold, Q2 depletions need to inflect back above zero or shipments will decelerate to work off the build. A Q2 depletions print of -1% or worse would put the guide at risk in the second quarter running.

Whether the tax-rate guide reappears and where the GAAP-EPS raise is sourced. With ~20% tax-rate guidance withdrawn on the same quarter as a $0.40–$0.70 reported EPS raise, management should be pressed on the drivers. If the Q1 10-Q reveals the raise was primarily tax-driven, the operational read-through from the "raise" is materially weaker than the headline suggests.

Wine & Spirits operating margin ramp. Q1 W&S margin of -0.7% against the 5–6% FY guide means H2 has to average roughly 7–8% for the full-year math to work. A Q2 print still below 3% would force a reset of the segment margin line, even with the top line performing.

Beer operating margin sustainability past Q1 seasonality. Q1 39.0% is a Q1-typical high-margin print. Management explicitly flagged in Q3 FY26 that Q4 faces depreciation headwinds and peak tariff load. Q2 FY27 (below Q1 in seasonal margin) sitting above 37% would confirm the FY 37–38% range is defensible; a print below 36% would flag Q4-style headwinds arriving early.

Buyback pace vs. the widening ratings-defense signal. $400M YTD in combined returns is below the Q1 FY26 pace. If Q2 pace stays at or below Q1's implied rate, management is running the IG-defense playbook — which is the correct posture but also signals no near-term appetite to accelerate returns into any stabilization narrative.

Sources

Constellation Brands Q1 FY2027 earnings press release (SEC 8-K exhibit, filed June 30, 2026): https://www.sec.gov/Archives/edgar/data/16918/000001691826000028/stzex991_53120268kearnings.htm
Constellation Brands Q4 FY2026 earnings press release (prior-quarter guidance baseline): https://www.sec.gov/Archives/edgar/data/16918/000001691826000008/stzex991_22820268kearnings.htm

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