Constellation Brands braces for significant earnings decline in July report

In the United States, Constellation Brands Inc. (NYSE: STZ), widely known for brands like Modelo Especial and Corona Extra, is preparing for its fiscal Q1 earnings report, scheduled for July 2, 2025. Analysts predict a notable drop in earnings per share (EPS) to $3.33 and projected revenues at $2.56 billion. This marks a significant decline from the $4.80 EPS and $2.66 billion revenue recorded during the same period last year, reflecting a 31% decline in earnings and a 4% decrease in sales. This reduction aligns with the company's ongoing focus on premium products following recent divestitures. Despite a slight 1% rise in sales during the fourth quarter, which reached $2.2 billion, cost-cutting measures resulted in an increased operating income of 6%. Historically, Constellation Brands has faced downward trends after earnings reports, with stock values decreasing about 60% of the time, typically dropping an average of 3.3%. This trend raises questions about future growth as the company has modified its medium-term revenue growth outlook from a robust 6%-8% to a more conservative forecast of 2%-4%. With beer contributing 84% of sales, or roughly $8.5 billion, emerging tariff challenges could further impact profit margins and sales demand if price adjustments are necessitated. Over the past 12 months, the company generated $10 billion in revenue alongside a negative net income of $-81 million. In light of these factors, traders are encouraged to consider historical trends when planning their investment strategies following earnings announcements. Observations show that over the past five years, of the 20 recorded earnings data points, 8 noted positive returns and 12 negative ones, illustrating a challenging environment for investors relying on past performance metrics to predict future outcomes.