Mixed: Constellation beats EPS, but sales fall 15% and beer volumes slip; adjusted outlook steady as reported EPS trimmed

Verdict: Mixed. Constellation Brands beat expectations on profit, but sales and beer volumes fell, and the full‑year reported EPS outlook was cut. Q2 FY26 net sales were $2.48 billion, down 15% year over year; adjusted (comparable) EPS was $3.63 and reported EPS was $2.65. Both revenue ($2.46 billion) and EPS ($3.38) topped consensus. Shares rose about 3–4% after hours on October 6. Comparable = adjusted for one‑off items. (globenewswire.com)

Beer drives the story: Constellation sells Corona and Modelo in the U.S., so category demand and brand mix matter most. (ir.cbrands.com)

Beer softened. Segment net sales fell 7% to $2.35 billion as shipments dropped 8.7% and depletions (sales from distributors to retailers) fell 2.7%. Operating margin declined 200 basis points to 40.6% on higher costs (including aluminum tariffs), lower volume absorption, and higher marketing. Management also cited distributor inventory rebalancing. Brand trends were mixed: Modelo Especial and Corona Extra both declined, while Pacifico and Victoria grew double‑digits. (globenewswire.com)

Wine & Spirits shrank as expected after divestitures. Net sales fell 65% and the business posted a –14.6% operating margin; on an organic basis (excluding sold brands), net sales were still down 19%. U.S. tracked‑channel performance outpaced the higher‑end wine segment, but profits turned negative. (globenewswire.com)

Profit and cash generation were solid versus expectations but down versus last year on a comparable basis. Comparable EPS of $3.63 fell 16% year over year; year‑to‑date free cash flow reached $1.1 billion, and the company repurchased $604 million of stock and declared a $1.02 dividend. (globenewswire.com)

Against the Street, results were better: sales of $2.48 billion beat the $2.46 billion consensus, and adjusted EPS of $3.63 topped $3.38. Still, the year‑over‑year declines (-15% sales; -16% comparable EPS) underline a tougher backdrop. After the print, shares were up roughly 3–4% after hours, though they remain down sharply year to date. (reuters.com)

Guidance: management reaffirmed its recently lowered adjusted FY26 outlook—comparable EPS of $11.30–$11.60 and an organic net sales decline of 4%–6%—but trimmed reported EPS to $9.86–$10.16 (from $10.77–$11.07 on Sept. 2). Segment outlooks remain cautious: Beer net sales –2% to –4% and Beer operating income –7% to –9% for FY26. (globenewswire.com)

Backdrop: leadership flagged softer consumer demand—especially among Hispanic consumers—and fewer social occasions, while cost pressure includes higher aluminum tariffs. These headwinds help explain weaker beer volumes despite continued share gains in tracked channels. (reuters.com)

Note on comparisons: reported EPS rose year over year largely because last year’s Q2 included a sizeable Wine & Spirits impairment; on a comparable basis, EPS fell. (globenewswire.com)

- Beer demand into the holidays: do depletions stabilize or stay negative, especially for Modelo Especial and Corona? (globenewswire.com)

- Margins vs. cost inflation: the net impact of aluminum tariffs and pricing on beer profitability. (globenewswire.com)

- Distributor inventory levels: any further shipment softness from rebalancing. (globenewswire.com)

- Mexico capacity investments: FY26 capex of ~$1.2B (about $1.0B for Mexico beer) and any progress updates. (globenewswire.com)

- Consumer health among core Hispanic customers and broader sentiment trends discussed by management. (marketwatch.com)

- Earnings call on Tuesday, Oct. 7 at 8:00 a.m. ET for more color on pricing, promotion, and demand. (ir.cbrands.com)