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Today's Exclusive Content
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.
- Special Report: Elon’s “Hidden” Company
Constellation Brands (NYSE: STZ), one of just 42 stocks in Berkshire Hathaway's (NYSE: BRK.B) portfolio, has staged a strong recovery from its recent lows. Shares fell as low as $127 in November 2025, a level that looked overly pessimistic given the company's brand strength. The consumer staples stock has rebounded above $160, a gain of more than 25%. The maker of Mexican beer brands such as Corona, Modelo and Pacifico rallied after posting its latest earnings. But that move may not be what it seems. With Constellation's recent gains and its latest results in mind, is the stock still a value, or could the rebound be running into a ceiling? Constellation Beats During Quarter, But Guidance Is ConcerningIn its latest quarter, Constellation reported revenue of $1.92 billion, down more than 11% year over year (YOY). Still, that topped analysts' forecast of $1.84 billion.
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The company also posted a solid beat on comparable earnings per share (EPS), reporting $1.90 versus estimates of $1.74. However, comparable EPS declined nearly 28% YOY. Constellation’s "comparable" EPS adjusts for significant divestments in fiscal 2025, including certain wine and spirits businesses, allowing investors to compare the performance of remaining operations. While the quarter's beats were encouraging, the company’s guidance painted a different picture. With this report, Constellation has entered fiscal 2027, since its fiscal year runs several quarters ahead of the calendar year. For FY2027, the company expects comparable EPS of $11.20 to $11.90, or $11.55 at the midpoint. That midpoint implies a roughly 2% decline versus FY2026 comparable EPS of $11.82. Guidance missed estimates of $12.38, which had implied about 5% YOY growth. The company also withdrew its FY2028 guidance that it had provided around the same time last year. Constellation’s guidance is moving in the wrong direction and does not align with expectations set in April 2025, when management projected comparable EPS would grow at a "mid-single digits to low-double digits" compound annual growth rate from FY2026 to FY2028. Now the firm is forecasting another year of negative growth after full-year comparable EPS fell 14% in FY2026. Withdrawing the FY2028 outlook does little to suggest that trend will reverse. Given that, it's notable that shares rose more than 8% the day after the earnings report. Squaring Constellation’s 8% Up-Move: CEO Statements Outweigh GuidanceSome may credit Constellation’s rally to the company's beat for the quarter. But guidance often matters as much as results. The firm beat comparable EPS by $0.16 in the quarter, yet it missed next year's expectation by $0.83. Overall, Constellation now expects $0.67 less in comparable EPS over five quarters (the reported quarter plus FY2027) than analysts had anticipated. Guidance withdrawals are rarely seen as positive, so these facts don't fully reconcile with the stock's sizable gain. It appears some investors are focusing on comments from CEO Bill Newlands. In a Wall Street Journal interview, Newlands said, "It's too early to declare victory, but the trends have been more positive," indicating improvement in beer sales among Hispanic consumers. Hispanic Americans account for roughly 50% of Constellation’s customer base. In its earnings commentary, management said: "zip codes with larger Hispanic populations continued to weigh on overall portfolio performance, [but] the impact moderated during the quarter as the rate of decline in those areas improved." Still, the guidance update does not convey confidence. It could reflect conservative forecasting: although Hispanic trends appear to be improving, they're not yet strong enough to support prior guidance. Overall, uncertainty remains elevated, making it difficult to view the recent price move as fully justified. Constellation: Focus Turns to the Future of Hispanic ReboundAt the moment, Constellation appears neither clearly overvalued nor undervalued. Its valuation implies low multi-year growth — an outcome that would be reasonable if the beer market and Hispanic consumption see a modest rebound. However, it's hard to be confident given the company withdrew its FY2028 outlook. The coming quarters should provide clearer evidence of whether improving trends among Hispanic consumers can reach an inflection point. |
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