Constellation Brands (STZ) Financials

Constellation Brands (NYSE: STZ) has exhibited notable financial trends over the past four years, with a detailed examination of revenue, profitability, cash flow, and balance sheet positions from Q3 2022 through Q4 2025.

Recent Quarterly Performance Highlights:

• Revenue remains strong with Q4 2025 operating revenue at $2.31 billion, showing resilience in sales volumes despite market fluctuations.
• Gross profit was $1.11 billion in Q4 2025, demonstrating effective cost control of revenue relative to sales, maintaining a gross margin above 48%.
• Q4 2025 operating income turned negative at -$150.3 million, significantly impacted by elevated operating expenses, including SG&A of approximately $505 million.
• Non-cash charges and impairments notably impacted earnings in prior quarters, especially a large $2.25 billion impairment charge in Q2 2025, contributing to significant net losses that quarter (-$1.19 billion).
• Cash flow from operating activities remains healthy, with $594.7 million generated in Q4 2025 despite the net loss, supported by substantial non-cash adjustments and working capital management.
• Net income swung from positive earnings in early 2025 quarters (e.g., $892.8 million net income in Q1 2025) to a heavy loss in Q4 2025 (-$370.6 million), reflecting volatility likely from one-time charges and expenses.
• Dividend payments per share remained consistent at approximately $1.01 over 2025 quarters, supporting shareholder returns despite fluctuations in earnings.
• The balance sheet remains strong with approximately $7.8 billion in common equity as of Q3 2025, providing a solid capital base.
• Total liabilities increased to $14.7 billion by Q3 2025, with long-term debt notably high at over $10 billion, indicating leverage that could pressure future profitability.
• The company has consistently repurchased common equity and paid dividends, reflecting an ongoing capital return strategy amid earnings variability.

Key Observations Over the Last Four Years:

• Revenue has generally grown year over year, supported by the company's strong brand portfolio and market presence.
• Several quarters show substantial non-operating expenses, including large impairments and investment losses, which have heavily impacted bottom-line results.
• Despite earnings pressure in later 2025, cash flow from operations remains positive, showcasing the company's solid ability to generate cash from core businesses.
• The company experienced swings between profitable and loss-making quarters, indicating volatility potentially from cost pressures, market challenges, or restructuring efforts.
• Consistent dividend payments underscore financial discipline and commitment to shareholder returns.
• The level of treasury stock has increased over time, reflecting ongoing share buybacks.
• Interest expense remains a considerable cost burden, generally around or above $100 million quarterly, pressuring net income.
• Working capital components like inventories and accounts receivable reflect stable operational scaling aligned with business growth.
• Capital expenditures show significant investments in property, plant, and equipment, suggesting focus on capacity expansion or modernization.
• The sizeable long-term debt and total liabilities present leverage risks that investors should monitor closely, especially if earnings fail to stabilize.

In summary, Constellation Brands displays robust revenue generation capabilities and positive operating cash flows. However, recent quarters demonstrate financial volatility driven by impairments and elevated expenses, leading to fluctuating profitability. The company's strong capital base and dividend profile are positives, but high debt levels and inconsistent earnings warrant caution.