Berkshire Bought the Dip—Now Constellation Brands Is Rebounding

Key Points

• Constellation Brands is rebounding sharply in early 2026 after a 36% loss last year, with its Q3 earnings beating expectations.
• Berkshire Hathaway increased its stake in STZ despite the stock’s downturn, signaling long-term confidence in its recovery potential.
• Strong beer segment performance, improving margins, and analyst price targets point to upside, even as broader alcohol demand remains uncertain.

After a disastrous 2025, shares of beer giant Constellation Brands NYSE: STZ are starting 2026 off on a very positive note. To the chagrin of Berkshire Hathaway NYSE: BRK.B, Constellation Brands delivered a total return of -36% last year. Prior to Warren Buffett's retirement, Berkshire initiated a position in Constellation during Q4 2024. As of September 2025, Berkshire held 13.4 million Constellation shares, valued near $1.8 billion at the time.

General weakness in the beer market and among Constellation’s customer base has contributed to the stock’s decline. Constellation lowered its full-year fiscal 2026 (FY2026) guidance back in September 2025 due to the difficult environment it faces. Note that the firm’s fiscal year period is several quarters ahead of the calendar period.

However, as of the Jan. 8 close, Constellation shares are up more than 7% in 2026. The stock has now rebounded approximately 16% since hitting a 2025 low near $128 in November. This comes as the firm’s latest earnings report sent shares up 5.3%. Let’s break down Constellation’s latest earnings to gain an updated perspective on the stock.

Constellation Delivers Impressive Bottom Line Beat

In its Q3 FY2026, Constellation reported net revenue of $2.22 billion. This was a decline of 10%, but exceeded analysts’ expectations by around $52 million. The consumer staples company reported comparable earnings per share of $3.06. This figure dropped around 6% from a year earlier. However, it was much better than consensus estimates of $2.63, which called for a 19% drop.

The company’s beer segment, which accounted for around 90% of revenue, saw sales drop 1%. However, this growth was better than the rest of the beer industry, allowing Constellation to gain market share. Amid a weak backdrop, Constellation’s beer business has consistently outperformed. In Q1 and Q2 FY2026, Constellation led the beer category in dollar share gains. This also held true in FY2025. Although sales dropped, the beer segment's operating margin rose by 10 basis points, indicating strong cost management.

Dragging down the firm’s total growth rate was its Wine and Spirits segment, where sales fell 51%. However, this was largely due to Constellation’s divestment of SVEDKA vodka and part of its wine portfolio. Excluding these impacts, sales dropped just 7%. Extending these exclusions to the whole company, sales growth was -2%, much better than the -10% reported figure. Overall, Constellation performed more than admirably during the quarter.

Coming Off Multi-Year Lows, STZ Could Have Significant Room to Run

Trading at around $148, Constellation has only rebounded moderately from its 2025 low near $128. Investors should note that this wasn’t just the stock’s lowest level last year; it was the lowest since April of 2020. This was just after the COVID-19 stock market crash that occurred in March.

Accordingly, Constellation hasn’t recovered from just a near-term low; it's bouncing back from a historic drawdown. This provides significant potential that Constellation’s rally can continue.

Berkshire Buys and Price Targets Support Constellation’s Potential

Supporting this argument is the fact that Berkshire bought over 6 million Constellation shares in Q1 2025. That quarter, Constellation’s lowest closing price was $158. Thus, the lowest price at which Berkshire could have bought these shares is around 7% above the stock’s current price.

Since then, Berkshire has increased its number of Constellation shares, showing continued confidence in this name even as the stock falls. This data suggests that Berkshire likely still sees substantial room for Constellation to appreciate.

Additionally, Wall Street analysts see solid potential in Constellation. The MarketBeat consensus price target of approximately $182 implies that shares could rise 23%.

Still, significant questions face the beer industry. In a recent Gallup survey, just 54% of Americans reported drinking alcohol, the lowest figure ever reported. However, this percentage has also dropped nearly as low in the past, before rebounding significantly. This suggests that recent trends in alcohol usage are more cyclical than structural, and that the industry could recover. This would be a strong tailwind for Constellation.

Adding in the company’s robust track record of beer segment share gains and its valuation, Constellation’s outlook skews to the upside.