AI Takeaway
STZ delivered strong Q1 FY2027 results with net income surging 26.7% YoY to $653.8M, driven by a 390 bps gross margin expansion to 54.3% and significant cost discipline, even as revenue dipped 3.3% to $2.43B.
Revenue
$2.43B
-3.27% YoY
Gross Margin
54.3%
++3.92% YoY
Operating Income
$845.3M
++18.42% YoY
Filed · Source: SEC EDGAR 10-Q filing
Revenue fell 3.3% YoY to $2.43B in Q1 FY2027, but gross profit rose 4.3% to $1.32B as cost of revenue dropped 10.9% to $1.11B, pushing gross margin from 50.4% to 54.3% — a meaningful improvement in profitability quality.
Source: Source: 10-Q Income Statement Data
Operating income jumped 18.4% YoY to $845.3M, with operating margin expanding 640 bps to 34.7%. SG&A expenses declined 8.7% to $457.0M, reflecting disciplined cost management that amplified the impact of gross margin gains.
Source: Source: 10-Q Income Statement Data
Net income grew 26.7% YoY to $653.8M, with net margin reaching 26.9%. This outpaced both revenue and operating income growth rates, suggesting favorable below-the-line items such as reduced interest expense consistent with the $992M reduction in long-term debt.
Source: Source: 10-Q Income Statement & Balance Sheet Data
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Upgrade to unlockSTZ carries $10.20B in long-term debt against $8.26B in stockholders' equity, resulting in a debt-to-equity ratio of 1.64. While debt has been reduced 8.9% YoY, the elevated leverage leaves the company exposed to interest rate fluctuations and limits financial flexibility in a downturn.
Source: Source: 10-Q Balance Sheet Data
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Upgrade to unlockReported EPS of $3.43 versus the $3.27 analyst consensus — a +4.8% beat for Q1 FY2027.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $2.43B | $2.52B | -3.27% |
Cost of Revenue | $1.11B | $1.25B | -10.92% |
Gross Profit | $1.32B | $1.27B | +4.26% |
Operating Income | $845.3M | $713.8M | +18.42% |
Net Income | $653.8M | $516.1M | +26.68% |
SG&A Expense | $457M | $500.7M | -8.73% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $22.11B | $22.26B | -0.69% |
Current Assets | $3.04B | $3.94B | -22.84% |
Total Liabilities | $13.56B | $14.73B | -7.95% |
Current Liabilities | $3.33B | $3.69B | -9.88% |
Stockholders' Equity | $8.26B | $7.27B | +13.63% |
Cash & Equivalents | $96.6M | $73.9M | +30.72% |
Long-Term Debt | $10.2B | $11.19B | -8.87% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $661.8M | $637.2M | +3.86% |
Investing Cash Flow | $-193.2M | $-196.1M | +1.48% |
Financing Cash Flow | $-474M | $-437.6M | -8.32% |
Share Buybacks | $223.8M | $306.1M | -26.89% |
D&A | $97.9M | $105.5M | -7.20% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Gross Margin | 54.3% | 50.4% | +3.92% |
Operating Margin | 34.7% | 28.4% | +6.37% |
Net Margin | 26.9% | — | — |
ROE | 7.9% | — | — |
ROA | 3.0% | — | — |
Current Ratio | $0.913 | — | — |
Debt to Equity | $1.642 | — | — |
STZ (Constellation Brands) delivered FY2026 net income of $1.69B (a dramatic swing from a prior-year loss of $81.4M) driven by a surge in operating income to $2.72B, even as total revenue declined 10.5% to $9.14B.
STZ's Q3 FY2026 results show a decline in revenue and net income, with significant cash flow changes and a strong increase in cash reserves.
Other companies in Distillers & Vintners
STZ reported Q1 FY2027 net income of $653.8M, up 26.7% YoY, and operating income of $845.3M, up 18.4%, despite a 3.3% revenue decline to $2.43B. The strong earnings growth was driven by a 390 bps expansion in gross margin to 54.3% and an 8.7% reduction in SG&A expenses.
STZ's revenue fell 3.3% YoY to $2.43B in Q1 FY2027, though the specific drivers (volume vs. pricing vs. segment mix) are not detailed in the available financial data. Notably, the revenue decline was more than offset by cost improvements, resulting in higher gross profit and net income.
STZ's financial health shows mixed signals: long-term debt was reduced 8.9% YoY to $10.20B and stockholders' equity rose 13.6% to $8.26B, but the current ratio of 0.91 indicates current liabilities slightly exceed current assets. Operating cash flow of $661.8M remains robust, supporting ongoing debt reduction and shareholder returns.
Yes, STZ made meaningful progress on deleveraging in Q1 FY2027, with long-term debt declining $992M or 8.9% YoY to $10.20B and total liabilities falling 8.0% to $13.56B. This debt reduction, funded in part by strong operating cash flow of $661.8M, also contributed to higher net income through reduced interest expense.
STZ repurchased $223.8M of shares in Q1 FY2027, a 26.9% decrease compared to $306.1M in the prior year period. The reduced buyback pace may reflect a prioritization of debt reduction and balance sheet strengthening over shareholder returns via repurchases.