Constellation Brands beat both revenue and earnings expectations this quarter, with top-line growth coming in slightly ahead of forecasts.
Margins held up well despite a sequential slowdown, and adjusted EPS grew over 16% year-over-year, showing strong profitability even in a softer demand environment.
So, is now a good time to buy Constellation Brands’ stock?
See Constellation Brands’ full financials, growth trends, and analyst forecasts on TIKR >>>
Q4 Notable Points:
- Revenue: $2.16B (1.9% estimate beat) (up 1.2% from last year)
- Operating Margins: 30.5% (41 basis points estimate beat) (up 96 bps from last year)
- Adjusted EPS: $2.63 (15.9% estimate beat) (up 16.4% from last year’s same quarter)
View Constellation Brands’ full Q4 earnings results >>>
Analysts Think Constellation Brands Has 15% Upside Today
Analysts have an average price target of $217/share today for Constellation Brands, which means they think the stock has just over 15% upside today:
STZ Looks Stable, But Short-Term Growth May Stay Soft
Constellation Brands reported solid earnings this quarter, beating expectations on both revenue and profits.
But despite strong margins and double-digit EPS growth, the company lowered its long-term beer growth forecast, signaling that the road ahead could be slower.
“As usual, we’re focused on what we can control — distribution, disciplined innovation, and execution — and we believe that’s going to continue supporting our leading beer business,” said CEO Bill Newlands during the earnings call.
See the full earnings transcript >>>
1. Growth Outlook Has Been Pulled Back
Constellation now expects lower revenue growth in the near term, with analysts forecasting low annual EPS growth over the next three years.
This marks a clear reset from its previously higher expectations, particularly for the beer business, which faces consumer pressure and volume softness.
Management pointed to “nonstructural socioeconomic factors” like inflation and cautious Hispanic consumer spending, which will probably make it hard to predict when demand will recover.
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2. Margins Are Holding Steady (For Now)
Despite soft top-line trends, profitability remains strong.
In Q4, operating margins expanded year over year, and EPS growth came in at 16%.
Management reaffirmed their ability to sustain 39% to 40% beer margins through cost savings, disciplined pricing, and modular expansion.
That said, tariffs and ongoing inflation are expected to offset some of those gains in margins over the next year.
3. Valuation Looks Reasonable, But Near-Term Growth Is a Risk
Today, the stock trades well below its 5-year average forward P/E ratio, trading at just 14.4 times expected earnings.
However, this lower multiple is mostly deserved because the business has had to cut growth forecasts.
Analysts only expect the business to grow earnings around mid-single-digits over the next 3 years, which makes a 14x P/E multiple seem pretty reasonable for the stock.
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TIKR Takeaway
Constellation’s lowered growth outlook suggests that investors may need to be patient before momentum returns.
Analyze Constellation Brands to see if it’s a good buy today, or find stocks that look even better!
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
