Where Will Constellation Brands Stock Be in 1 Year?

Constellation Brands (NYSE: STZ) was once considered a reliable blue-chip stock. It owns more than 100 brands of beers, spirits, and wines, and it has raised its dividend annually for 10 consecutive years. But over the past 12 months, Constellation's stock price has dropped nearly 30%. Let's see why that happened -- and if it can bounce back over the next 12 months.

What happened to Constellation over the past year?

Constellation struggled with four main headwinds over the past year. First, younger millennials and Gen Zers are consuming less alcohol than previous generations. That trend is sparking concerns that alcohol could suffer the same fate as tobacco.

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Second, Constellation is heavily exposed to the Trump administration's tariffs against Mexico, since its top brands include Modelo, Corona, Pacifico, Fresca Mixed, and Casa Noble Tequila. Canada's retaliatory tariffs against the U.S. could exacerbate that pressure. Piper Sandler analysts believe those tariffs could reduce its earnings per share (EPS) by $3 to $3.75 in fiscal 2026 (which ends in February 2026). That would equal 22% to 27% of its EPS of $13.78 in fiscal 2025.

Third, its wine sales, which once seemed better insulated from the shifting consumer trends than its beer and spirits, are also declining. Its wine sales fell 9% in fiscal 2024 and declined another 7% in fiscal 2025.

Lastly, Constellation's near-term outlook is grim. For fiscal 2026, it expects its organic sales to stay flat (between negative 2% and plus 1%), with its 0% to 3% growth in beer sales offsetting the double-digit declines across its wine and spirits segments as it divests its weaker wine brands. Assuming the tariffs against Mexico stay in effect, it expects its EPS to tumble 8% to 11%.

What will happen to Constellation over the next year?

To stabilize its business and boost its margins, Constellation plans to divest its cheaper wines (including Woodbridge, Meiomi, and Simi) and focus on expanding its premium wines (like Kim Crawford and Robert Mondavi Winery). It's also trying to capture younger drinkers with nonalcoholic drinks and lighter alcoholic beverages like Modelo's Aguas Frescas.

As the U.S. raises its tariffs against Mexico, Constellation still plans to invest roughly $2 billion into its Mexican production facilities through fiscal 2028 to expand its brewing capacity. It's also restructuring its business and cutting costs to achieve more than $200 million in annual savings through fiscal 2028.

Assuming those efforts pay off, Constellation expects its organic sales to grow 2% to 4% in fiscal 2027 and fiscal 2028. It believes its EPS will rise by mid-single to low double digits in fiscal 2027 and the low to mid-single digits in fiscal 2028. That matches analysts' expectations for 9% and 6% EPS growth in fiscal 2027 and fiscal 2028, respectively.

Where will Constellation's stock be in 12 months?

Constellation's stock looks cheap at 14 times forward earnings, and it pays a decent forward yield of 2.2%. It also bought back about 2% of its shares over the past year, and it recently authorized a new $4 billion buyback plan for the next three years.

Assuming Constellation matches analysts' estimates and still trades at 14 times forward earnings by the beginning of fiscal 2027 (March 2026), its stock could rise about 4% to $193 a share over the next year. That gain might seem anemic, but it also suggests its stock is bottoming out at these levels -- even as the tariffs throttle its near-term sales and compress its margins.

However, Constellation's stock could bounce back quickly if the U.S. reduces its tariffs against Mexico and Canada. If that happens, it could command a higher valuation and rally a lot more than 4% over the next 12 months.

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