Constellation Brands, Inc. (STZ), headquartered in New York, is one of the largest beer companies and a leading, high-end wine company in the U.S. Valued at a market cap of $44 billion, Constellation Brands’ beverages are marketed in over 100 countries worldwide.
Companies worth $10 billion or more are generally described as "large-cap stocks," Constellation Brands fits right into that category, with its market cap exceeding this threshold, reflecting its substantial size, influence, and dominance in the brewing industry. Its market leadership stems from its diverse portfolio of premium alcoholic beverage brands, including well-known names in beer, wine, and spirits. The company benefits from strong market positioning, particularly in the high-growth Mexican import beer segment, with flagship brands like Corona, Modelo, and Pacifico driving sales.
Additionally, Constellation’s focus on innovation, such as product extensions and premiumization, enhances its appeal to younger demographics.
Despite its strength, Constellation Brands has slipped 12.7% from its 52-week high of $274.87 achieved on Apr. 11. STZ has fallen 3.6% over the past three months, underperforming the broader Nasdaq Composite ($NASX), which has surged 15.2% over the same time frame.
Over the longer term, STZ has lagged behind NASX. STZ has surged 1.8% over the past 52 weeks but dipped marginally in 2024, underperforming NASX’s 38.8% gains over the past year and 33.5% returns on a YTD basis.
STZ has been trading above its 50-day moving average since early December but below its 200-day moving average since early October.
Adding to the weak price momentum, STZ shares plunged more than 4% on Oct. 3 after releasing Q2 earnings results. While its adjusted EPS of $4.32 surpassed the consensus estimate, its adjusted revenue of $3.1 billion missed the market’s expectation, leading to the decline. Moreover, the fiscal 2025 outlook dampened investor sentiment, with forecasts of a 4%-6% drop in wine and spirits sales and a 16%-18% decline in segment operating income, which overshadowed growth momentum in the beer segment.
On the bright side, Constellation Brands’ competitor, The Boston Beer Company, Inc. (SAM), has substantially underperformed STZ. SAM has declined 9.2% over the past 52 weeks and 8.8% in 2024.
Among the 21 analysts covering the STZ stock, the consensus rating is a “Strong Buy.” The mean price target of $290.05 represents a 20.9% potential upside from current price levels.
