09:04 AM EDT, 07/03/2025 (MT Newswires) -- Constellation Brands' ( STZ ) fiscal first-quarter results were largely in line with senior management's expectations despite missing Wall Street's estimates, even with macroeconomic and consumer-related challenges, RBC Capital Markets said in a Thursday client note.

The beer and wine company on Tuesday reported adjusted earnings of $3.22 a share for the quarter ended May, down from $3.57 the year before, while sales declined 6% to $2.52 billion. Both metrics fell short of the consensus on FactSet.

RBC said the quarter largely played out as expected with Constellation recording a 2.6% decline in beer depletions, the pace at which units are sold to end consumers, in line with consensus and the brokerage's channel checks. When adjusted for one less selling day, the beer business saw depletions decline by 1.2%, the maker of Modelo and Corona said.

Still, Constellation reiterated its fiscal 2026 adjusted EPS outlook range of $12.60 to $12.90, with the Street looking for $12.66. The company also maintained its full-year projections for enterprise organic sales to be down 2% to up 1%, beer sales to be flat to up 3% and organic sales for wine and spirits to fall 17% to 20%.

"Despite the softer top and bottom line performance relative to (consensus, Constellation) reiterated guidance across the board as the quarter was largely in line with their expectations," RBC Co-Head of Global Consumer and Retail Research Nik Modi wrote. "Broader macro data points and Hispanic consumer sentiment have not materially changed which is in line with their original guidance expectations."

During a Wednesday earnings call with analysts, Constellation Chief Executive Bill Newlands told analysts that there is "some additional price promotion that's going on in the marketplace," according to a FactSet transcript. The company is also adjusting its Modelo Oro pricing strategy, "to go after high-end light beer, where we see competitive opportunity for us to succeed," Newlands said.

The company now expects a $20 million headwind related to aluminum tariffs for the remainder of its fiscal 2026, compared with expectations set earlier in the year for a $30 million impact, Chief Financial Officer Garth Hankinson told analysts. Hankinson said they don't expect to "fully offset" the incremental tariffs volume wise, but is still aiming for margins in line with projections given in April.

"While the macros and consumer behaviors remain a challenge, we view them as manageable as beer (comparables) begin to ease," Modi said. "(Management's) expectations for growth in the near term are encouraging but overall, don't view the quarter as materially thesis changing either way."

RBC maintained its outperform rating on Constellation's stock and its price target of $233.