Where Will Constellation Brands Be in 3 Years?

Source The Motley Fool

Constellation Brands (NYSE: STZ) is facing pressure on its beer sales from President Donald Trump's policies, coupled with what has already been a slower environment for its wine and spirits brands. Given these factors, let's break down why it's hard to be overly bullish on Constellation's performance over the next three years.

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 »

Declining beer consumption and tariffs

According to Reuters, U.S. beer consumption fell to its lowest level in 40 years in 2024. That's a tough signal for the market. And Constellation CEO Bill Newlands warned that President Trump's tariffs and immigration policies are leading to weaker beer sales for the company, as Constellation is heavily reliant on Hispanic buyers for its brands of Corona and Modelo, which are being impacted by Trump's policies.

Regarding the Trump front, I think it's incredibly difficult to say for sure what is and isn't going to happen over the next four years. He seems to be changing plans weekly, and what is tariff'd today, might not be tariff'd tomorrow, and vice versa. The larger concern is the trend in beer consumption. If younger generations stray away from the traditions of the past when it comes to drinking, the industry as a whole faces a fairly substantial challenge.

Earnings and guidance

From an earnings perspective, the company is a bit inconsistent on an annual basis. Constellation brands flips back and forth rather frequently in terms of annual earnings. Out of the last six years, four have had negative earnings. For fiscal 2025, Constellation Brands finished the year with a loss of $81.4 million. When you consider that you can buy into companies like Microsoft (NASDAQ: MSFT) and have much more consistent earnings, it makes a lot less sense to be invested in a tougher industry like beer, wine and spirits.

As noted by Marketwatch, fiscal 2026 expectations are down. Constellation Brands predicted adjusted earnings of $12.60 to $12.90. That would mark a decline from fiscal 2025. Organic net sales aren't much better, with an expected decline of 2% to the downside, or an estimate of a 1% gain to the upside. That's pretty slow growth, if it is even achieved.

Not a market gem

Over the last five years, this has not been a stock that outperforms the market. Shares have gained 12.2% vs. an S&P 500 return of 83% (at the time of writing). While beer is the main source of income for this business, wine and spirits still matter, and they've been a headache for a while now. Management noted that they're going to attempt to spin off some of the weaker performing wine and spirits brands, but the question here is how do they offset that fallout in revenue, when management is expressing concerns over its top beer brands?

Objectively, this just does not look like a business that stands to thrive over the next three years. In that timeline, President Trump remains President; meaning tariffs remain a potential factor. The issues on the wine and spirits front remain present, and one has to wonder where the replacement revenue will come from in the event that segment declines. To top it all off, the weaker drinking trends of younger people remain prevalent. My prediction is that the stock underperforms over the next three years. Constellation simply does not seem positioned to be a top name for investors.

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 $532,771!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $593,970!*

Now, it’s worth noting Stock Advisor’s total average return is 781% — a market-crushing outperformance compared to 149% 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 April 21, 2025

David Butler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft. The Motley Fool recommends Constellation Brands and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
Dollar holds above 100 near a 3-month high — three Fed speakers and a $69 billion auction land tonightThe dollar index closed at 100.43 on Monday, its highest close since late July, after a weekly gain of about 1% — the best in more than three months — and is holding above the 100.00 handle in Asia. Three Fed officials speak tonight alongside a $69 billion two-year note auction, the first leg of $183 billion of Treasury supply this week.
Author  Suzie
Sep 22, Tue
The dollar index closed at 100.43 on Monday, its highest close since late July, after a weekly gain of about 1% — the best in more than three months — and is holding above the 100.00 handle in Asia. Three Fed officials speak tonight alongside a $69 billion two-year note auction, the first leg of $183 billion of Treasury supply this week.
placeholder
October hike odds climb toward 60% as Goldman and BofA both flip — what Warsh's "dose of accommodation" really changedRate futures now price roughly 55% to 62% for a 25bp hike at the October 27-28 FOMC, up from about 30% before Chair Warsh's post-meeting framing that the Fed is merely "removing some accommodation." Goldman Sachs has added an October hike to its forecast and Bank of America now sees moves in both October and December. Here is the repricing, the language behind it, and the two data points that decide it.
Author  Irene Q.
Sep 23, Wed
Rate futures now price roughly 55% to 62% for a 25bp hike at the October 27-28 FOMC, up from about 30% before Chair Warsh's post-meeting framing that the Fed is merely "removing some accommodation." Goldman Sachs has added an October hike to its forecast and Bank of America now sees moves in both October and December. Here is the repricing, the language behind it, and the two data points that decide it.
placeholder
Memory chips surge, Nasdaq notches a second straight record close — why the Dow fell 185 points anywayMicron gained 5%, SanDisk 6.8%, Seagate 4% and Western Digital 3% as the memory complex led the Nasdaq Composite to a second consecutive record close of 27,244.28. But the Dow fell 185 points as JPMorgan, Wells Fargo and Schwab slid more than 3% each — a split tape that says more about positioning than about the economy.
Author  Irene Q.
Sep 23, Wed
Micron gained 5%, SanDisk 6.8%, Seagate 4% and Western Digital 3% as the memory complex led the Nasdaq Composite to a second consecutive record close of 27,244.28. But the Dow fell 185 points as JPMorgan, Wells Fargo and Schwab slid more than 3% each — a split tape that says more about positioning than about the economy.
placeholder
US input costs rose at the fastest pace in four years — the September flash PMI beat is an inflation story, not a growth storyUS September flash PMIs came in far above expectations, with the composite at 58.4, a five-year high. But the detail that moved markets was input cost inflation at its fastest since October 2022, driven by fuel, transport and supply shortages. Brent is back above $100 and the 10-year Treasury yield has hit its highest since 2007.
Author  Suzie
Sep 24, Thu
US September flash PMIs came in far above expectations, with the composite at 58.4, a five-year high. But the detail that moved markets was input cost inflation at its fastest since October 2022, driven by fuel, transport and supply shortages. Brent is back above $100 and the 10-year Treasury yield has hit its highest since 2007.
placeholder
WTI (USOIL) Is down 2.03% on Sep 25: Here Is WhyWTI (USOIL) is down 2.03% at Sep 24 22:20(UTC+0), now at $92.517, with a 7-day down of 3.63%.What is driving WTI (USOIL)’s stock price down today?The drop in WTI crude oil prices was primarily driven by
Author  TradingKey
Sep 25, Fri
WTI (USOIL) is down 2.03% at Sep 24 22:20(UTC+0), now at $92.517, with a 7-day down of 3.63%.What is driving WTI (USOIL)’s stock price down today?The drop in WTI crude oil prices was primarily driven by
goTop
quote