Where Will Constellation Brands Stock Be in 3 Years?

Core Insights - Constellation Brands has seen a significant decline in stock value, dropping over 40% in the past three years while the S&P 500 increased by over 70% [1] - The company faces long-term challenges including stalled growth, rising tariffs, and substantial losses [1] Revenue Breakdown - In fiscal 2025, Constellation generated 84% of its revenue from beer, 14% from wine, and 4% from spirits [3] - Beer revenue growth has decreased from 11% in FY 2023 to 5% in FY 2025, while wine and spirits segments have seen negative growth [4] Challenges Faced - The beer business has been impacted by changing consumer preferences, particularly among younger demographics, and economic pressures on Hispanic consumers [4][5] - Rising tariffs on aluminum cans and supply chain issues in Mexico have forced price increases, further slowing growth [5] - The wine and spirits segments have struggled as consumers shifted away from cheaper brands, leading to a focus on higher-end products but resulting in reduced revenues [6] Future Projections - In the first half of fiscal 2026, revenue fell 10% year over year, with expectations of further declines in beer, wine, and spirits sales [8] - Analysts predict total revenue will drop 11% in fiscal 2026 but may stabilize in fiscal 2027 and grow by 3% in fiscal 2028 [9] Profitability Outlook - Constellation turned unprofitable in fiscal 2022 and 2023 due to poor investments but is expected to return to profitability in fiscal 2026 [10][11] - Analysts forecast GAAP earnings per share (EPS) growth of 18% in fiscal 2027 and 4% in fiscal 2028, despite a projected decline in non-GAAP EPS in fiscal 2026 [11] Stock Valuation - The stock trades at 12 times forward adjusted earnings estimates with a forward dividend yield of 2.9%, indicating limited downside potential [13] - However, upside potential may be constrained until the company demonstrates a sustainable business model [13]