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Featured Story from MarketBeat
Berkshire Bet Constellation Cuts Guidance: Why Shares Rose 8%By Leo Miller. Originally Published: 4/10/2026. 
Key Points
- Beer giant Constellation Brands has seen solid gains over the past several months.
- The firm posted meaningful beats in its latest earnings report, but also issued fairly disappointing guidance.
- Optimism around a highly important customer base is leading shares higher, but whether this optimism holds remains in question.
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Constellation Brands (NYSE: STZ), one of the just 42 stocks in Berkshire Hathaway's (NYSE: BRK.B) portfolio, has staged a strong recovery from recent lows. Shares fell as low as $127 in November 2025—a level that looked overly pessimistic despite headwinds in the alcohol industry. The consumer staples stock has now rebounded above $160, a gain of more than 25%. The maker of Mexican beer brands like Corona, Modelo and Pacifico jumped after releasing its latest quarterly results. But that rebound may not be as straightforward as it appears. Given Constellation’s recent gains and its latest report, is the stock still a value, or is the rally nearing a ceiling? Constellation Beats During Quarter, But Guidance Is ConcerningIn the quarter, Constellation reported revenue of $1.92 billion, a decline of more than 11% year-over-year (YOY). Still, it topped expectations: analysts had forecast $1.84 billion.
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The company also posted a beat on comparable earnings per share (EPS). Comparable EPS came in at $1.90, above estimates of $1.74, although this metric was down nearly 28% YOY. Constellation’s “comparable” EPS adjusts for significant divestments completed in fiscal 2025, including certain wine and spirits franchises, so investors can compare the ongoing business lines more accurately. While the quarterly beats were encouraging, the company’s forward guidance painted a different picture. Because Constellation’s fiscal year runs ahead of the calendar, the company is now entering FY2027. For FY2027 it expects comparable EPS of $11.20 to $11.90 (a midpoint of $11.55). That midpoint implies a roughly 2% decline versus FY2026 comparable EPS of $11.82. The guidance missed analyst estimates of $12.38, which had implied about 5% YOY growth. The company also withdrew its FY2028 outlook, which it had provided around this time last year. That guidance clearly runs counter to expectations set in April 2025, when the firm projected that comparable EPS would grow at a “mid-single digits to low-double digits” CAGR from FY2026 to FY2028. Now, after a 14% drop in full-year comparable EPS in FY2026, Constellation is forecasting another year of negative growth and has pulled its FY2028 outlook. Those developments do not inspire confidence—so it’s worth asking why shares climbed more than 8% the day after the results. Squaring Constellation’s 8% Up-Move: CEO Statements Outweigh GuidanceSome investors may credit the stock’s move to the quarter’s beats. But guidance often carries as much weight as reported results. Constellation beat quarterly comparable EPS by $0.16 but missed on FY2027 guidance by $0.83. Viewed together, the company now expects 67 cents less in comparable EPS over five quarters (the reported quarter plus FY2027) than analysts had anticipated. Guidance withdrawals are also typically a negative signal. Those factors don’t neatly align with a double-digit percentage spike in the stock. Instead, the market seems to be reacting to optimistic comments from CEO Bill Newlands. In a Wall Street Journal interview, Newlands noted that “it’s too early to declare victory, but the trends have been more positive,” referring to improving beer sales among Hispanic customers. Hispanic Americans make up roughly 50% of Constellation’s customer base. The company echoed that tone in its earnings commentary, saying that while “zip codes with larger Hispanic populations continued to weigh on overall portfolio performance, the impact moderated during the quarter as the rate of decline in those areas improved.” Still, the guidance update itself does not convey confidence. One interpretation is that management is being conservative in its outlook: trends among Hispanic consumers may be improving, but not yet enough to justify maintaining prior guidance. Overall, that leaves an elevated level of uncertainty, making it hard to view the rally as fully justified. Constellation: Focus Turns to the Future of a Hispanic ReboundAt present, Constellation doesn’t look clearly overvalued or undervalued. Its valuation implies low multi-year growth—plausible if the beer market and Hispanic consumption rebound modestly. But it’s difficult to be confident in that scenario given the company’s decision to withdraw its FY2028 outlook. The coming quarters should provide a clearer indication of whether improving trends among Hispanic consumers can reach an inflection point. |
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