Constellation Brands Is Down Nearly 40% in 2025. Is This a Once-in-a-Lifetime Buying Opportunity Before the Stock Goes Parabolic?

Key Points

• Constellation Brands’ stock fizzled out over the past year.

• Its core beer business faces near-term and long-term challenges.

• Its stock looks cheap, but it could struggle to command a higher valuation.

• 10 stocks we like better than Constellation Brands ›

Constellation Brands (NYSE: STZ), one of the world's leading producers of beers, wines, and spirits, was often considered a reliable long-term investment. However, its stock has tumbled about 37% this year as the S&P 500 rose 12%.

Should investors consider Constellation's steep pullback to be a once-in-a-lifetime buying opportunity? Or will it sink even lower as investors fret over its long-term challenges?

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Image source: Getty Images.

Why did Constellation Brands lose its luster?

Constellation generates most of its revenue from its beer business. It imports most of its beers -- including Corona, Modelo, and Pacifico -- from Mexico. Roughly half of its beer sales come from Hispanic consumers. The rest of its revenue comes from its smaller wine and spirits segments.

Constellation faces four major challenges. First, younger Millennial and Gen Z consumers are drinking less beer. That decline is often attributed to health, wellness, and mindfulness trends, economic constraints, and shifts in drinking habits during social gatherings.

Second, many of its Hispanic consumers are reducing their discretionary spending as they grapple with immigration issues and the impact of tariffs on the construction, manufacturing, agricultural, and hospitality industries. Third, the Trump Administration's tariffs on overseas aluminum, which were raised from 25% to 50% this June, will squeeze its canned beer margins. Aluminum cans are still used in roughly 39% of its beer shipments from Mexico.

Lastly, Constellation has been divesting many of its cheaper wine and spirits brands to strengthen its higher-end brands. That "premiumization" strategy should eventually boost its long-term gross margins, but it's throttling its near-term revenue growth.

How long will Constellation's downturn last?

From fiscal 2021 to fiscal 2025 (which ended this January), Constellation's revenue grew at a CAGR of 4%. That growth rate was steady, but it was entirely driven by its beer business as its wine and spirits segments continued to shrink.

Data source: Constellation Brands.

In addition to its aforementioned challenges, its beer business faced supply chain constraints in Mexico (where the government canceled its planned Mexicali brewery in 2020). Its price hikes countered inflation, but they also curbed its sales to lower-income consumers.

In early September, Constellation reduced its full-year guidance for fiscal 2026. It now expects its organic sales to decline 4% to 6%, compared to its prior outlook for a 2% decline to 1% growth. It expects its beer sales to decline 2% to 4% as it struggles with lower volumes and higher tariffs. On the bottom line, it expects its comparable earnings per share (EPS) to drop 16% to 18%, compared to its earlier expectations for a milder 6% to 9% decline.

In a statement, CEO Bill Newlands said the "challenging macroeconomic environment" had "dampened consumer demand and led to more volatile consumer purchasing behavior" since the end of May. In other words, Constellation's downturn won't end anytime soon.

Is this a once-in-a-lifetime buying opportunity?

Constellation's stock might seem cheap at 12 times next year's earnings, but it could struggle to command a higher valuation as long as its sales and profits keep declining. For fiscal 2026, analysts expect its revenue and comparable EPS to decline 11% and 17%, respectively.

But for fiscal 2027, they expect its revenue and comparable EPS to rise 1% and 10%, respectively, as its beer sales stabilize and it right-sizes its wine and spirits business. However, its recent guidance cut suggests that recovery isn't right around the corner.

The bulls might think Constellation's stock will soar as it gets it right-sizes its business, overcomes its near-term challenges, and commands a higher valuation. Unfortunately, I think it will hit a lot of speed bumps before it grows again. Therefore, I wouldn't rush to buy its stock -- even after its near-40% decline -- and expect parabolic gains.

Should you invest $1,000 in Constellation Brands right now?

Before you buy stock in Constellation Brands, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Constellation Brands wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $648,369!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,089,583!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 189% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of September 15, 2025

Leo Sun has no position in any of the stocks mentioned. The Motley Fool recommends Constellation Brands. The Motley Fool has a disclosure policy.