From Yahoo Finance: 2025-03-26 09:01:00

Constellation Brands Inc. (STZ) has seen a 19% stock slump in the last three months and a 33% drop over the past year, facing shifting consumer preferences towards non-traditional alcoholic beverages like wine and beer. Trade wars and tariffs have also clouded market sentiment, impacting the company’s bottom line.

President Donald Trump’s softened tariffs may still affect STZ’s market sentiment, especially with a potential 25% tariff on Mexican imports like Corona and Modelo. Analysts like Robert Moskow predict a 20% earnings per share headwind from these tariffs, potentially impacting sales volume and margins.

Constellation’s beer segment drives most of its sales but is experiencing slower growth. The wine and spirits segment is declining, with a shift towards quality drinks over quantity among younger consumers. Constellation may exit the wine vertical altogether due to changing consumer trends.

Despite challenges, Constellation is adapting to consumer preferences by introducing non-alcoholic beverages like Corona Non-Alcoholic and investing in brands like Hiyo. Financially, the company remains strong with solid revenue and profit margins, a balanced balance sheet, and a 27% upside potential from the current price.

Analysts have a Moderate Buy consensus on STZ, with price targets varying post-third-quarter earnings. While there may be turbulence in 2025, Constellation’s strategy in the beverage industry remains appealing, driven by consistent cash generation, cheap valuation, and a healthy dividend yield. The company’s focus on meeting consumer demands positions it as a leader in the industry.

Read more: Constellation Brands Stock (STZ) Stands Out as Value Play Despite Macro Headwinds