AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 5/6 · 18/10/2026
Moat50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 3/4 · Beer dollar-share gains and high-end supplier leadership, supported by repeated realized pricing contributions, demonstrate a brand advantage. The evidence does not support an enterprise-wide advantage across wine and spirits or exceptional durability.
durability · 2/4 · Pricing benefits across several fiscal periods support persistence, but Fiscal 2026 beer shipment weakness and wine and spirits impairment limit confidence. Contractual brand-right duration is not established.
customer dependency · 1/4 · Brand preference creates some demand support, but disclosed consumer substitution and price-sensitive wine and spirits volume indicate fragile dependency. No operational lock-in is demonstrated.
erosion resilience · 2/4 · Beer relative outperformance, realized efficiencies and subsequent gross-profit improvement show adaptation. Earlier volume and cost pressure, alongside wine and spirits deterioration, demonstrate meaningful erosion exposure.
Pricing power50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 2/4 · Beer pricing contributed $147.6 million in Fiscal 2024, $128.2 million in Fiscal 2026 and $30.7 million in the first half of Fiscal 2027. Wine and spirits strategic pricing reduced sales and gross profit, making enterprise pricing power mixed.
retention · 2/4 · Assessed indirectly from reported share gains and consumer-supported beer shipment growth. Fiscal 2026 shipment declines, price-assisted wine and spirits volume and later distributor inventory rebuilding prevent treating shipment growth as demonstrated customer retention. No retention rate is inferred.
margin resilience · 2/4 · Beer pricing and efficiencies cushioned higher costs, and first-half Fiscal 2027 gross profit improved. Fiscal 2026 pricing did not offset the combined volume and cost headwinds. Recent cost relief also reflects absorption, depreciation and tariffs rather than pricing alone.
contractual freedom · 2/4 · Implemented selective beer pricing and wine and spirits pricing actions demonstrate practical discretion to change prices. Decisions remain constrained by competition, and the passages do not establish unrestricted contractual repricing rights or customer commitment terms.
Predictability92
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 75.00
- Revenue growth volatility (pp)
- 6.91
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 1.58
Financial strength35
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 30.13
- netDebtEbitGrade
- 23.08
- interestCoverageGrade
- 59.33
- currentRatioGrade
- 26.44
- Debt / FCF (x)
- 5.89
- Net debt / operating income (x)
- 3.85
- Interest coverage (x)
- 7.53
- Current ratio (x)
- 1.08
Capital allocation—
Missing required inputs: dilution. Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 10.37
- 3-year average SBC / revenue (%)
- 0.70
- cashConversionGrade
- 0.00
Management56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Reported operating cash flow, free cash flow, maintained leverage and fulfilled debt obligations support funding discipline. Wine and spirits goodwill impairment and realized venture and Canopy losses demonstrate substantial allocation setbacks; repurchases alone do not establish value creation.
incentive alignment · 3/4 · Implemented performance equity and actual below-target annual and multi-year incentive outcomes demonstrate pay responding to performance. Ownership guidelines add alignment, but actual holdings and compliance are unavailable, and half of annual equity awards are time-based.
execution · 2/4 · Reported efficiency benefits, cash generation and beer category outperformance support execution. Wine and spirits impairment, excess-inventory write-downs and missed sales and EBIT incentive targets make the record mixed. Operating outcomes are indirect evidence of management effectiveness and largely predate the current CEO.
governance · 2/4 · Completed voting simplification, an independent compensation committee and external director evaluations support governance quality. Conditional family nomination rights remain through November 2027, limiting an unqualified strong assessment. Board self-praise is not treated as proof of effectiveness.
Evidence
Despite a subdued consumer and category environment, the Beer Division continued to significantly outperform the broader beer category, remaining the leading dollar share gainer across Circana™ U.S.
Fiscal 2026 accomplishments / beer relative performance and dollar-share gains · Filed 08/06/2026
tracked channels and the #1 high‑end beer supplier in the U.S.
Fiscal 2026 accomplishments / high-end beer supplier ranking · Filed 08/06/2026
The increase in Beer gross profit is primarily due to (i) $299.9 million of shipment volume growth and (ii) the $147.6 million of favorable impact from pricing, partially offset by (i) $163.7 million of higher cost of product sold and (ii) $12.0 million of unfavorable product mix.
MD&A / Fiscal 2024 Beer gross-profit bridge · Filed 23/04/2024
The decrease in Beer gross profit is largely due to (i) a $170.7 million decrease in shipment volume and (ii) $149.5 million of increased cost of product sold, partially offset by the $128.2 million of favorable impact from pricing.
MD&A / Fiscal 2026 Beer gross-profit bridge · Filed 22/04/2026
The increase in Beer gross profit is primarily due to (i) a $90.7 million increase in shipment volume, (ii) $35.7 million of reduced cost of product sold, and (iii) the $30.7 million of favorable impact from pricing, partially offset by $28.2 million of unfavorable product mix.
MD&A / first-half Fiscal 2027 Beer gross-profit bridge · Filed 07/10/2026
While our shipment volume growth benefited from consumer demand, we believe our net sales continued to be impacted by the economic uncertainty and socioeconomic factors discussed above.
MD&A / first-quarter Fiscal 2027 beer consumer demand · Filed 01/07/2026
The increased cost of product sold is primarily due to (i) $58.3 million in tariffs, largely on aluminum imports under Section 232, (ii) $58.2 million of unfavorable fixed cost absorption related to decreased production levels as compared to Fiscal 2025, and (iii) a $14.6 million increase in brewery costs, including maintenance and utilities.
MD&A / Fiscal 2026 beer tariffs and unfavorable fixed-cost absorption · Filed 22/04/2026
The increase in Beer net sales is due to (i) $130.2 million of shipment volume growth, as distributors sought to rebuild inventory days-on-hand and (ii) $12.8 million of favorable impact from pricing in select markets, partially offset by $14.4 million of unfavorable product mix primarily from a shift in package types.
MD&A / second-quarter Fiscal 2027 beer pricing and distributor inventory rebuilding · Filed 07/10/2026
The decrease in organic gross profit is largely attributable to (i) a $38.3 million decline in branded wine and spirits shipment volume, (ii) the $30.0 million from lower contractual distributor payments, (iii) $18.0 million of unfavorable product mix, (iv) the $17.6 million from strategic pricing actions, and (v) $17.1 million of increased cost of product sold.
MD&A / Fiscal 2026 Wine and Spirits organic gross-profit decline · Filed 22/04/2026
The increase in organic net sales is largely driven by $17.2 million of branded wine and spirits shipment volume growth, partially offset by a (i) $4.9 million decrease in non-branded net sales led by a decline in bulk sales and (ii) $3.2 million decrease from strategic pricing actions taken on select brands.
MD&A / first-quarter Fiscal 2027 wine and spirits volume and strategic pricing · Filed 01/07/2026
The goodwill associated with the Wine and Spirits segment was fully impaired during Fiscal 2025.
Critical accounting estimates / Wine and Spirits goodwill fully impaired in Fiscal 2025 · Filed 22/04/2026
•the decision of existing or potential Customers or consumers to purchase competitors’ products instead of ours, including due to competitive pricing pressures;
Competition risk / customer and consumer substitution · Filed 22/04/2026
To partially offset the increase in cost of product sold we are executing efficiency and cost optimization initiatives focused largely on procurement and logistics that resulted in over $200 million of net benefit for Fiscal 2026.
MD&A / realized Fiscal 2026 procurement and logistics efficiency benefits · Filed 22/04/2026
The reduced cost of product sold is primarily due to (i) $56.4 million of favorable fixed cost absorption related to increased production levels as compared to Six Months 2026, (ii) $14.4 million of lower depreciation, and (iii) $8.2 million of lower tariffs as compared to Six Months 2026, largely on aluminum imports under Section 232, partially offset by (i) $22.6 million of higher material costs, including glass, aluminum, paper, and starch, and (ii) $18.0 million of higher warehousing and obsolescence costs.
MD&A / first-half Fiscal 2027 Beer cost drivers · Filed 07/10/2026
We intend to continue to monitor the inflationary environment and the impact on the consumer when we consider passing along rising costs through further selling price increases, subject to normal competitive conditions.
MD&A / selling-price decisions subject to competitive conditions · Filed 23/04/2024
From an enterprise perspective, the Company generated approximately $2.7 billion of operating cash flow and $1.8 billion of FCF during Fiscal 2026, exceeding expectations and underscoring the effectiveness of its disciplined operating and capital allocation approach.
Fiscal 2026 accomplishments / operating cash flow and free cash flow · Filed 08/06/2026
The Company maintained its target comparable net leverage ratio of approximately 3.0x, sustained its approximately 30% dividend payout ratio, and returned more than $900 million to stockholders through share repurchases.
Fiscal 2026 accomplishments / leverage, dividend payout and completed repurchases · Filed 08/06/2026
We concluded an impairment did exist, and accordingly, the Exchangeable Shares with a $97.3 million carrying value at the April 2024 date of conversion and exchange were written down to $21.2 million, their estimated fair value as of February 28, 2025, resulting in a $76.1 million total impairment.
Investment notes / realized Canopy Exchangeable Shares impairment · Filed 23/04/2025
As of February 28, 2025, we evaluated certain investments, primarily driven by business underperformance and solvency concerns, and concluded they should be written down to zero resulting in a loss of $47.9 million.
Investment notes / venture investments written down to zero · Filed 22/04/2026
As of August 31, 2026, we were in compliance with our covenants under our 2025 Credit Agreement and our indentures, and have met all debt payment obligations.
Liquidity and capital resources / covenant compliance and debt payments · Filed 07/10/2026
•Eliminated NQSOs from the annual long-term equity incentive award program and granted a mix of 50% PSUs and 50% time-based RSUs for the Fiscal 2026 annual long-term equity incentive award, maintaining a balanced mix of performance and retention compensation elements.
Implemented Fiscal 2026 compensation changes / PSU and RSU mix · Filed 08/06/2026
•For our Fiscal 2026 AMIP, we achieved approximately 95% of the Net Sales target, approximately 93% of the Comparable EBIT target, and approximately 110% of the FCF target, resulting in AMIP payments at approximately 54% of the target award.
Fiscal 2026 compensation outcomes / targets and actual annual incentive payments · Filed 08/06/2026
•Our performance under the Fiscal 2024 - 2026 PSU program, including our TSR performance relative to the TSR performance of the companies in the S&P 500 Food, Beverage & Tobacco Index and our performance against organic net sales growth targets, delivered approximately 33% of the target award.
Fiscal 2024–2026 PSU program / realized performance outcome · Filed 08/06/2026
•We maintain robust stock ownership guidelines (six times base salary for our President and Chief Executive Officer and three times base salary for all other executive officers) that we believe align management and stockholder interests
Executive compensation policies / stock ownership guidelines · Filed 08/06/2026
Upon completion of the Reclassification, the prior “high-vote/low-vote” voting structure was eliminated, and Constellation now has, for substantially all purposes, a single class of voting common stock (Class A Stock) with one vote per share.
Corporate governance / completed elimination of high-vote structure · Filed 08/06/2026
•The Committee, which is comprised entirely of independent directors, approves all elements of executive compensation
Executive compensation policies / independent compensation committee · Filed 08/06/2026
Until November 2027 and so long as the Sands Family Stockholders, collectively, have beneficial or record ownership of at least 10% of the issued and outstanding shares of Class A Stock, our Board of Directors will, subject to the
Governance risk / duration and ownership condition for family nomination rights · Filed 22/04/2026
procedures and limitations set forth in the Reclassification Agreement, nominate two individuals designated by WildStar for election to our Board of Directors at any annual meeting of our stockholders at which directors are to be elected (or otherwise in connection with any action by written consent pursuant to which a majority of the Board of Directors will be elected).
Governance risk / obligation to nominate two WildStar designees · Filed 22/04/2026
As part of the Board refreshment, succession planning, and effectiveness review summarized above, during Fiscal 2025, the CGNR Committee engaged an independent third party to conduct individual director evaluations.
Board evaluation / independent individual director evaluations · Filed 08/06/2026
Nicholas Fink became our President and Chief Executive Officer on April 13, 2026.
Leadership transition / new CEO effective April 13, 2026 · Filed 22/04/2026
We recognized net costs primarily in connection with losses on write-downs of excess inventory resulting from our initiatives to streamline operations, improve efficiencies, and reduce our cost structure primarily within our Wine and Spirits segment.
Comparable adjustments / realized excess-inventory write-downs · Filed 01/07/2026
