Is Constellation Brands Stock A Real Bargain?
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Constellation Brands (STZ) stock currently trades at 11.6 times earnings, resting at about half the 22.6 multiple of the median S&P 500 company. The shares lost 3.7% over the past year while the S&P 500 returned 15.0%. That divergence could mean a strong beer business is on sale, or it could reflect a fair price for one that has stopped delivering. So what does a buyer actually get for that discount?
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What A Buyer Gets In Constellation Brands
Investors are mostly buying a beer company, and a very profitable one at that. Beer generated 91% of Constellation Brands’ revenue in fiscal 2026. Over the twelve months ended August 2026, the company kept 31.9% of its sales as operating profit, ahead of the 18.5% retained by the median S&P 500 company.
Those profits translate into cash. Constellation Brands generated $1.84 billion of free cash flow over those same twelve months, paying out about $1.48 billion as dividends and share buybacks. That outlines the case for a value buyer: a high-margin business that hands most of its cash back to owners.
Constellation Brands’ Sales Have Fallen Two Years Running
Revenue dropped 4.3% over the twelve months ended August 2026, following a 5.6% decline in the prior twelve-month period. Revenue growth averaged -1.9% across the last three twelve-month periods. Only the oldest, ended August 2024, grew, at 4.1%.
Wine and Spirits sales dropped by about half in fiscal 2026, falling to $824 million from $1.67 billion. Beer sales slipped 2.6% during the same year, meaning the business behind most of the company’s revenue shrank as well.
Operating income decreased to $2.94 billion over the twelve months ended August 2026, down from $3.40 billion two years earlier. Net income climbed over that same two-year span, rising to $1.92 billion from $0.58 billion. So part of today’s low multiple comes from net income that sits higher than in recent years, rather than a business earning more from its operations.
Is Constellation Brands’ Turnaround Showing Up Yet?
Signs of a turnaround have shown up in just one quarter so far. Revenue rose 6.1% from a year earlier in fiscal Q2 2027, bouncing back from a 3.3% decline in fiscal Q1. Management said on its October 7 call that the beer business outperformed and accelerated from the previous quarter. They said that Pacifico had become a top 10 beer brand, growing at something like 20% so far in fiscal 2027. In October 2026, the company also announced the acquisition of SpikedAde, a spirit-based ready-to-drink brand.
Management said distributors cut their stocks too far in fiscal 2026, and that the company had to ship during the quarter to clear their order backlogs. A single quarter that includes refilling distributors is a start, but it is not yet a trend.
Management’s fiscal 2027 forecast calls for Beer sales growth of 6% to 8%, a 7% midpoint. Hitting that midpoint means Beer sales would rise by about $580 million from the $8.32 billion reported in fiscal 2026.
At this price, a buyer is not betting that the market missed a growing business. The bet is instead that the company gets Beer growing again, leveraging margins that already sit well above those of a typical company. Beer sales growth, measured against management’s 6% to 8% forecast for fiscal 2027, is the number to watch when Constellation Brands next reports, expected in January 2027.
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