Constellation Brands Q2 fiscal 2027 earnings: why STZ fell as beer shipments outran depletions

Constellation Brands (NYSE: STZ) fell after its fiscal second-quarter report on Tuesday, October 6, 2026, even though comparable earnings of $3.74 a share and net sales of $2.63 billion both came in above analyst estimates. The results reached the MoveSurge news feed at 16:08:32 ET; the stock slipped 0.27% in the first minute of after-hours trading, from $115.11 to $114.80, and was 2.48% lower at $112.26 fifteen minutes later. The weak line in the report was beer depletions, the cases Constellation's distributors sold on to stores and bars, which fell 0.6% in the quarter to August 31 while beer shipments into those distributors rose 5.5%.

Constellation Brands Q2 fiscal 2027 results

Beer brought in $2.47 billion of the $2.63 billion in net sales, about 94%, which is why the beer volume lines carry more weight with the stock than the per-share beat.

Why beer shipments rose while depletions fell

Constellation books revenue when it ships beer to its distributors, so shipments drive the sales line. Depletions count what those distributors then sell to retailers and bars, which sits much closer to what drinkers are buying. In the second quarter the company shipped 123.9 million cases, up from 117.4 million a year earlier, while depletions fell 0.6%. Constellation said distributors ordered more than they sold because they were rebuilding inventory days on hand to healthier levels, and that off-premise sales around the World Cup in June and July came in below industry expectations.

Restocking can carry shipments above depletions only until distributors hold the inventory they want, after which shipments return to the pace of depletions. Part of the quarter's sales growth therefore came from distributors filling their warehouses rather than from more beer reaching consumers.

Beer depletions by brand

The decline came from the two largest brands: Modelo Especial, which Constellation said kept its place as the top beer brand by dollar sales, fell about 2%, and Corona Extra fell about 5%. Pacifico, Victoria and the Chelada line grew quickly but from much smaller volumes, so their gains did not cover the flagship declines.

Beer operating income still rose 1% to $964.2 million, but the operating margin fell 160 basis points to 39.0%. The company said lower tariff costs and better absorption of fixed costs were more than offset by higher marketing investment and other selling, general and administrative spending.

Fiscal 2027 guidance and the earnings call

Constellation affirmed its fiscal 2027 comparable EPS outlook of $11.20 to $11.90 and raised its reported EPS outlook to $11.85 to $12.55, from $11.50 to $12.20. It kept its forecasts for operating cash flow of $2.4 billion to $2.5 billion and free cash flow of $1.6 billion to $1.7 billion. On the conference call at 8:00 a.m. ET on Wednesday, October 7, management said trends improved in September and that the company could finish the year near the high end of the comparable range if they held.

In premarket trading STZ was at $107.75 at 8:01 a.m. ET, 6.39% below its last price before the release, and began to recover in the minutes after the call opened. A line carrying the September comment reached the MoveSurge news feed at 08:07:16 ET, when the stock stood at $110.15; it was 0.77% higher a minute later at $111.00 and at $111.31 by 8:20 a.m., up 1.05% from that point and still 3.30% below the price before the results.

SpikedAde acquisition

Alongside the results, Constellation announced that it had bought SpikedAde, a spirits-based ready-to-drink brand in the fast-growing "Ade" segment. It paid $75 million at closing for full ownership and agreed to contingent payments of up to $278 million over five years tied to the brand's performance, a possible total of $353 million. The company said the purchase does not change its fiscal 2027 outlook.