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Constellation Brands (STZ) Could Be 24% Undervalued After Earnings Beat And SpikedAde Deal

Simply Wall St · 1d ago

Constellation Brands (STZ) just delivered quarterly earnings that topped Wall Street expectations, supported by strong beer performance, increased marketing behind Pacifico and Modelo, and progress rebuilding distributor inventories, while reaffirming guidance and announcing the SpikedAde acquisition.

That upbeat earnings story is finally showing up in the chart, with Constellation Brands’ share price jumping 4.43% over the last day and 9.42% over the past week, even though the 90 day share price return is down 7.78% and the 1 year total shareholder return is down 11%. This indicates that recent momentum is improving after a tougher multi year stretch.

Compare Constellation Brands’ rebound with other alcohol and beverages stocks that already screen well on quality and value using our hand picked 27 high quality undervalued stocks.

Bulls see Constellation Brands’ earnings beat, beer momentum and SpikedAde deal as the start of a reset. Bears point to multi year underperformance. Which side does today’s valuation actually lean toward?

Most Popular Narrative: 24% Undervalued

Constellation Brands is trading at $123.63 against a widely followed fair value estimate of $163.35, so the current gap hinges on how durable investors think the beer engine and margin story really are.

The main thing that has to go right is that Constellation Brands continues to execute on its operator mindset in beer while rebuilding Wine & Spirits margins from very low current levels.

The current valuation implies that the market is pricing Constellation Brands as if flat beer sales, weaker alcohol demand, and margin pressure will persist, despite the company reporting resilient beer fundamentals and growth in reshaped Wine & Spirits.

See why 83 investors see Constellation Brands as 24% undervalued.

Result: Fair Value of $163.35 (UNDERVALUED)

Still, the Constellation Brands story can break if tariffs increase Wine & Spirits costs or if financially stretched Hispanic consumers cut back further on core beer brands.

Find out about the key risks to this Constellation Brands narrative.

Next Steps

If this mix of optimism and concern around Constellation Brands feels familiar, then treat it as a prompt to check the numbers yourself and decide quickly where you stand. To see both sides laid out clearly, review the 4 key rewards and 1 important warning sign.

Looking for more Constellation Brands style opportunities?

If Constellation Brands has sharpened your focus on pricing, quality and risk, then broaden your watchlist now before the next wave of ideas moves without you.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.