STZ stock trends down due to weak beer demand and margin compression from input costs, outweighing earnings beats.

Well, it seems there is a similar conflict to the East-West rap conflicts here. Okay, let's talk about Constellation Brands. Look, at first glance the numbers looked strong, whether we're talking about revenue or net profit, but there seems to be some concern about beer sales, even though we have seen some growth there.

Yes, we simply do not see this company reporting the profits that the market would like to see. The stock continues to move downwards here following the earnings announcement. We saw net sales rise by approximately 6% year-over-year, reaching $2.63 billion .

They beat Wall Street's expectations of around $2.54 billion, with adjusted earnings per share of $3.74. Market expectations were for $3.56.

Now, net sales in the beer sector have increased by 5%, driven mainly by the FIFA World Cup and the NBA Finals. We saw the wine and spirits sector achieve a double-digit quarter in terms of sales, up 17% year-on-year, but their outlook for the coming period was slightly disappointing.

They reaffirmed their earnings per share guidance for fiscal year 2027, and also confirmed their net sales guidance, which is between -1% and +1%, but the operating margin has effectively been reduced to between 31% and 32%.

This is their range. This is a decrease from the previous range of 32% to 33% .

So, they are still facing pressure on margins, and are experiencing, let's say, less-than- expected demand in the beer sector. This has been expected for a long time. What's really interesting is that this company has also been hurt by rising input costs over the past two years , especially if you look at aluminum.

This is one of the stories I was really looking forward to this morning . Their discussion on the call was about trying to manage input prices. Unfortunately , they don't seem to have reached a bottom for that.

Therefore, weak sales on the beer side and pressure on margins are the reason we are seeing the stock trending downwards this morning.