Constellation Brands shares have dropped 53% from their high to around $128, just above a 52-week low, even as its beer brands gained the most U.S. market share last quarter. The stock trades near 11 times forward earnings while paying the highest dividend yield in company history.
Constellation Brands shares have dropped 53% from their high to around $128, sitting just above a 52-week low of $126.45. The slide reflects muted growth expectations, as weaker consumer spending has pressured sales at the maker of Modelo, Corona, Pacifico, and Victoria.
At roughly 11 times forward earnings, the stock looks cheap for a company with exclusive U.S. distribution rights to some of the country's most popular imported beers. Constellation also owns wine brands like Kim Crawford, but higher gas prices and tighter discretionary budgets have made consumers more cautious over the past year.
Beer brands keep gaining share
In fiscal 2026, which ended in February, organic sales fell 10% year over year, driven mainly by weakness in the wine segment. However, comparable organic sales rose 3% year over year in the most recent quarter, suggesting results have begun to stabilize even as overall demand remains soft.
Beer represents more than 90% of the company's total sales, and the softness doesn't appear to reflect a loss of brand power. Modelo Especial remains the top brand in U.S. beer by dollar sales, and Constellation's beer portfolio was the biggest market-share gainer in the category last quarter.
A record dividend yield
Constellation continues to generate strong cash flow, posting trailing 12-month free cash flow of $1.83 billion and returning about 39% of that to shareholders through dividends. Management raised the dividend earlier this year by $0.01 to $1.03 per share quarterly, pushing the forward yield to 3.2% — the highest in the company's history.
Real risks remain, including shifting tariff policy, intense competition, and changing preferences across beer, wine, and spirits. Even so, at around 11 times expected earnings and 12 times free cash flow, much of the recent bad news already appears priced into the shares.
A prolonged slump could still push the stock lower, but investors are collecting a 3.2% yield, the highest in Constellation's history, in the meantime.
Source: Fool
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