Constellation Brands faces 6% swing as earnings test beer demand

Constellation Brands Inc. is expected to report first-quarter revenue of $2.4 billion for fiscal 2027 when it releases results after the closing bell Tuesday, a 5% decline from a year earlier that would mark a fifth straight quarter of falling sales.

"The beer category is facing a challenging macro environment, though Constellation's portfolio of premium brands like Modelo gives it relative insulation," Goldman Sachs analysts wrote in a note earlier this month, citing a weaker-than-expected Memorial Day weekend as a warning sign for the broader industry.

Analysts project adjusted earnings of $3.20 per share, according to estimates compiled by Visible Alpha. Options pricing suggests traders anticipate a swing of as much as 6% in either direction by the end of the holiday-shortened week, which from Monday's close would put the stock above $147 or below $132.

The results come as Constellation, the maker of Modelo and Corona, navigates a shift in American drinking habits. Younger consumers are drinking less alcohol than prior generations, while budget-conscious shoppers have pulled back on spending. The stock has lost 14% over the past 12 months and is up just 1% year to date.

Analyst sentiment remains divided but leans bullish. Six of nine analysts tracked by Visible Alpha rate the stock a buy, with two neutral and one sell. The average price target of $178 implies roughly 30% upside from Monday's close. UBS recently cut its target to $175 from $186, citing weaker beer consumption trends.

The broader earnings season context adds pressure. Constellation is among the first consumer discretionary companies to report, and its results will be scrutinized as a bellwether for the sector. The Zacks Consumer Discretionary sector has seen negative estimate revisions since the start of April, according to the firm's latest earnings preview.

A miss would test investor patience. The stock has already priced in headwinds, trading near its lowest levels in a year. A beat, particularly on margins, could reignite confidence in Constellation's ability to defend pricing power. The company's conference call is scheduled for 8 a.m. ET on Wednesday, where management will face questions about volume trends and the outlook for the key summer selling season.

This article is for informational purposes only and does not constitute investment advice.