Constellation Brands: Buffett’s $2.2B Bet May Have Hit Bottom

Key Points

• Warren Buffett's $2.2 billion Constellation Brands investment has begun to recover after the stock hit an over five-year low.
• Constellation's latest earnings showed sharp declines in sales and profits. However, the company provided encouraging margin data.
• With shares less than 10% off lows, STZ continues to look like a strong long-term value bet.

Since hitting rock bottom, Warren Buffett’s $2.2 billion bet, Constellation Brands NYSE: STZ, has managed to stage a modest recovery. Constellation shares fell to less than $132 in late September. The last time shares traded so low was in March 2020, due to the COVID market crash. However, shares have since rebounded by about 8% to trade just below $143.

Constellation’s Q2 2026 earnings report, released on Oct. 6, helped the company achieve this. Shares gained a combined 3% in the two following trading days. Below, we’ll break down Constellation’s earnings and gain an updated perspective on the consumer staples stock. Could shares be in store for a significant near-term rally, or will investors need to continue being patient to unlock significant upside?

STZ’s Earnings: Mixed, But With Signs of Strength

With very low expectations, Constellation saw its shares rise despite providing mixed results. The maker of Mexican beers like Modelo, Corona, and Pacifico posted revenues of $2.48 billion, or a decline of 15%, around $200 million lower than expected. However, the company’s gross margin increased by 100 basis points to 52.8%. This significantly beat expectations, as analysts expected the figure to fall.

This allowed Constellation to post a big beat on adjusted earnings per share (EPS). It came in at $3.63, or a 16% drop. Still, this significantly surpassed expectations of $3.37, or a 22% drop. Notably, the firm maintained its full-year guidance, which it previously lowered. This was a good sign, showing that the company’s expectations have not materially worsened over the past month. All in all, Constellation’s report was somewhat encouraging given the difficult environment the firm is in.

Updated Price Targets Clash With Consensus, Suggesting a Longer Road to Recovery

Currently, the MarketBeat consensus price target on Constellation is nearly $189. This number points to the possibility of a 31% rally in shares. However, after Constellation’s earnings report, MarketBeat tracked several Wall Street analysts who updated their forecasts.

Among them, the average target was about $163. This suggests shares could increase by roughly 14%. While significant, this potential rise is much more conservative than the consensus forecast. Thus, although Constellation is recovering from its depths, a more substantial recovery may take longer than previously thought.

STZ’s Tailwinds & Headwinds: Demographic Shifts vs. GLP-1s

One key tailwind for Constellation is the expectation that Hispanic Americans will continue to become a larger part of the U.S. population. Hispanic Americans account for around 50% of Constellation’s beer sales. This group is also driving the bulk of population growth in the United States. Analysts expect this to continue, regardless of immigration trends, providing the company with a key structural growth driver.

Additionally, immigration from Hispanic countries to the U.S. will only help Constellation. Theoretically, population movements between the two could simply mean that the location of Constellation's revenues would shift, but wouldn’t change much in totality. However, Constellation actually does not generate any revenue in Mexico. Due to licensing agreements, Constellation can only sell its Mexican beers in the United States. Meanwhile, Anheuser-Busch InBev SA/NV NYSE: BUD has the rights to sell these products in Mexico and most other countries.

Many investors have pointed to increased GLP-1 usage as a key headwind for Constellation. The concern is that these drugs reduce cravings in patients. Thus, alcohol consumption will come under pressure as GLP-1 usage rises. However, there is currently not robust scientific evidence to support this idea.

In 2024, the Lancet Journal released a systematic review of six studies to evaluate the claim. It concluded that “there is little high-quality evidence” that shows the effect of GLP-1s on alcohol use. Similarly, a 2025 systematic review of eight studies found that GLP-1s were not associated with a total reduction in alcohol intake. Clearly, these reviews provide significant pushback on the idea that GLP-1s are a meaningful headwind for Constellation at this point.

Constellation's Long-Term Potential Remains Strong

Overall, it is no secret that Constellation’s business is in a rut. However, with the stock still trading barely above its five-year low, downside potential looks very limited. Over the long term, shares have a strong potential to recover due to Constellation’s robust beer brands and favorable demographic trends. This results in a favorable risk-reward profile for the stock. Importantly, shares remain approximately 85% below their all-time high of $264, highlighting the substantial upside potential available to long-term investors.