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
Semiconductor Sector Continues to Rise, Should Retail Investors Buy Intel or AMD? On April 23, Eastern Time, Intel (INTC) reported its latest quarterly earnings results, showing that revenue grew 7% to $13.6 billion and earnings per share was $0.29, beating expectation
Author  TradingKey
5 hours ago
On April 23, Eastern Time, Intel (INTC) reported its latest quarterly earnings results, showing that revenue grew 7% to $13.6 billion and earnings per share was $0.29, beating expectation
placeholder
Gold drops below $4,700 on stronger US Dollar, Middle East tensions Gold price (XAU/USD) falls to around $4,690 during the early Asian session on Friday. The precious metal attracts some sellers amid a stronger US Dollar (USD) and elevated oil prices that stoked inflation worries. 
Author  FXStreet
14 hours ago
Gold price (XAU/USD) falls to around $4,690 during the early Asian session on Friday. The precious metal attracts some sellers amid a stronger US Dollar (USD) and elevated oil prices that stoked inflation worries. 
placeholder
Silver Price Forecast: XAG/USD plummets below $76 as oil price posts fresh weekly highSilver price (XAG/USD) is down almost 2.3% to near $76.00 during the European trading session on Thursday. The white metal faces selling pressure as oil prices extends its winning streak for the third trading day on Thursday.
Author  FXStreet
Yesterday 10: 10
Silver price (XAG/USD) is down almost 2.3% to near $76.00 during the European trading session on Thursday. The white metal faces selling pressure as oil prices extends its winning streak for the third trading day on Thursday.
placeholder
WTI sticks to positive bias above $92.00 amid Middle East tensionsWest Texas Intermediate (WTI) – the benchmark US Crude Oil price – fades an Asian session spike to the $95.80-$95.85 area, or a one-and-a-half-week top, and retreats to the lower end of its daily range in the last hour.
Author  FXStreet
Yesterday 01: 24
West Texas Intermediate (WTI) – the benchmark US Crude Oil price – fades an Asian session spike to the $95.80-$95.85 area, or a one-and-a-half-week top, and retreats to the lower end of its daily range in the last hour.
placeholder
JPMorgan Raises S&P 500 Target; Can AI Sector Continue to Drive US Stocks?JPMorgan Chase has raised its year-end target for the S&P 500, noting that the core driver is not a simple recovery in sentiment, but rather upward earnings revisions for AI-related techn
Author  TradingKey
Apr 22, Wed
JPMorgan Chase has raised its year-end target for the S&P 500, noting that the core driver is not a simple recovery in sentiment, but rather upward earnings revisions for AI-related techn
goTop
quote