 "Constellation Brands Jumps On US Tariff Pause, But Poor Outlook Prompts Retail Investors To Look Elsewhere")
synopsis
The company is also selling a part of its wines portfolio to The Wine Group, as it shifts focus to high-margin alcoholic beverages
Liquor firm Constellation Brands Inc (STZ) shares rose 7.3% on Wednesday but lost some steam in after-hours trading, as investors cheered President Donald Trump's move to pause new tariffs on several countries.
The rally obscured the impact of a downbeat forecast for the year, announced after trading hours, which dragged the sentiment among retail investors.
Constellation said it expects earnings of $12.33 to $12.63 per share in the fiscal year 2026, which reflects the anticipated impact of the US tariffs. Wall Street had estimated adjusted earnings for the year of $13.39 to $15.29, according to Bloomberg estimates.
Constellation, already battling weak sales due to consumer preferences shifting away from alcoholic beverages, will face a 25% tariff on imported canned beer.
The company imports popular Mexican beers and has previously disclosed that it relies on limited facilities to produce those brands. Constellation is the sole importer and seller of Corona beer, produced by Mexicoâs Grupo Modelo, in the US.
For its fiscal fourth quarter, the company reported earnings of $2.63 per share on revenue of $2.1 billion. Both the figures came above expectations.
On Wednesday, Constellation also announced that it is selling a part of its wine portfolio, including Woodbridge and Robert Mondavi Private Selection, to The Wine Group.
Financial terms of the deal, which the company expects to close in FY26, were not disclosed.
The company said the move is part of a strategy to focus on higher-priced wines and will be accompanied by a review of the organizational structure expected to help deliver more than $200 million in annual cost savings by fiscal year 2028.
On Stocktwits, retail sentiment dropped to 'extremely bearish' from 'bearish', while message volume jumped to 'extremely high'.
Several users posted saying that the earnings report was "bad", with one pointing out the downward revision to the FY27-FY28 forecasts.
Another user said the tariff pause from Trump disrupted their otherwise thought-through put position on the stock.
As of last close, shares of STZ are are down 17%
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