Where Will Constellation Brands Stock Be in 5 Years?

Core Insights - Constellation Brands has faced significant challenges over the past five years, resulting in an 8% decline in stock value while the S&P 500 rose by 86% [1] - The company generates the majority of its revenue from its beer business, which has seen a shift in revenue distribution from 67.3% in fiscal 2020 to 83.7% in fiscal 2025 [4][6] - Analysts predict a decline in revenue from $10.2 billion in fiscal 2025 to $9.9 billion by fiscal 2028, but expect profitability to return in fiscal 2026 [13] Business Performance - In fiscal 2025, Constellation's revenue breakdown was 83.7% from beer, 14.2% from wine, and 2.1% from spirits, indicating a significant shift towards beer [4] - Revenue growth from beer has decelerated, with a 5% growth rate in fiscal 2025 compared to 11% in the previous two years [5][7] - The wine and spirits segments have experienced declining revenues, with wine revenue decreasing by 7% and spirits by 11% in fiscal 2025 [5][10] Strategic Moves - The company has divested lower-margin wine and spirits brands to focus on premium offerings, which has impacted overall revenue [6] - Management plans to continue pruning its wine and spirits portfolio to strengthen higher-margin brands [10] - Constellation is exploring options to mitigate tariff impacts, including potentially increasing prices, although demand among younger consumers may limit pricing power [12] Future Outlook - Analysts expect a compound annual growth rate of 7% in EPS from fiscal 2026 to fiscal 2028, with profitability anticipated to return in fiscal 2026 [13][14] - If the company can navigate tariff challenges and refine its product portfolio, stock prices could rise by approximately 45% over the next five years [14] - Despite potential gains, Constellation may still underperform compared to other consumer staples and the S&P 500 [15]