Predicting the Future Direction of Constellation Brands' Shares Within the Next Year
In the dynamic world of business, Constellation Brands, the company behind popular brands such as Corona, Modelo, and Robert Mondavi wines, is currently navigating through tough times.
Recent data from YCharts reveals that the total return level for Constellation Brands has lagged behind the S&P 500 by a significant margin, with a drop of over 25% over the past year. This decline is mirrored in the company's financial performance, with net sales falling 6% yearly in Q1 of fiscal 2026 to $2.5 billion.
Beer, which makes up approximately 80% of Constellation's revenue, has been a major contributor to these figures. The company faces significant headwinds, including the threat of tariffs on its most popular beers from Mexico and competition from independent breweries and distillers.
However, despite these challenges, Constellation Brands continues to offer an above-average dividend yield of 2.4%, far above its five-year average yield of 1.5% and the S&P 500 average of 1.2%. The company pays $4.08 per share in annual dividends.
The growing dividend payout offers investors an added incentive to hold Constellation stock. In fact, the annual dividend hikes for Constellation Brands have risen for nine consecutive years, making it likely that they will continue.
Warren Buffett's Berkshire Hathaway increased its stake in Constellation Brands by 114% in the first quarter of 2025, a move that has likely boosted investor confidence. BlackRock has also increased its stake in Constellation Brands in recent months, suggesting that investors expect moderate growth in the stock price over the next year, driven by strong demand in the beverage alcohol market.
Despite the decline in Constellation's sales and profits, the forward P/E ratio, which doesn't include the asset impairments from the trailing 12 months, is 13, a level that likely factors in the company's challenges. This suggests that the stock may be undervalued and could potentially recover as more investors follow Berkshire's lead.
Looking ahead, Constellation Brands forecasts enterprise organic net-sales growth between -2% and 1% for fiscal 2026, excluding the numbers from Svedka, a vodka brand it recently sold. As the company continues to navigate these challenges, it remains to be seen how it will fare in the coming months.
In conclusion, while Constellation Brands faces significant headwinds, its above-average dividend yield, probable payout hike, and the increased stakes by Berkshire Hathaway and BlackRock suggest that it could be a promising investment opportunity for those willing to ride out the current storm.
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