Key Takeaways
- Constellation Brands closed at $118.39 on Oct. 7, 29% below its February high, and BMO Capital reiterated its $190 target the next day, 60% above that close.
- Beer depletions fell 0.6% in the quarter to Aug. 31 because Corona Extra and Modelo Especial lost volume, and management expects net sales to be flat this fiscal year.
- Analysts still expect $11.80 a share for the year to February 2027, but the stock trades at 9.9x forward earnings against a five-year average of 17.2x.
- BMO’s target looks plausible but stretched, since it needs the multiple to recover to 15.9x without much earnings growth to drive it.
Constellation Brands (STZ) closed at $118.39 on Oct. 7, 29% below its February high. On Oct. 8, BMO Capital’s Andrew Strelzik reiterated his Outperform rating and $190 price target, 60% above that close.
The slide came in stages
First, a rough fiscal year. Adjusted EPS fell to $11.82 in the year to February 2026, from $13.78, and CEO Nick Fink said distributors cut inventories so far that “we entered FY ’27, frankly, too light.” The outlook for the year to February 2027 is flat at best: comparable EPS of $11.20 to $11.90, on net sales between down 1% and up 1%.
Then, a September scare. As Wells Fargo’s Chris Carey put it on the Oct. 7 call, investors left a conference last month expecting inflation to squeeze second-half gross margins. The stock closed at $112.77 on Sept. 29, its lowest close of the past year.
Then, the quarter to Aug. 31. Beer net sales rose 5%, but depletions (what distributors sell on to retailers) fell 0.6%, with Corona Extra down about 5% and Modelo Especial about 2%.
BMO hasn’t budged
BMO set its $190 target in September 2025 and has held it through the slide. RBC Capital’s Nik Modi stayed at Outperform on Oct. 8, at $182.
Management seems to agree: Constellation has bought back $530 million of shares this fiscal year, and CFO Garth Hankinson said it speeds up buybacks “when we see a dislocation in our stock price versus its intrinsic value.”
Does $190 add up?
The rest of the Street is heading the other way. Over the past year, the consensus target fell from $173 to $154, and the low target from $118 to $99.
Estimates have held up better. Analysts expect $11.80 a share for the year to February 2027, in line with fiscal 2026’s $11.82, and $12.16 the year after.
And nothing in this quarter argues for big cuts: Fink expects the high end of the range “if the positive September trends that we saw continue.”
Investors are paying much less for those earnings. Constellation trades at 9.9x forward earnings, above its five-year low of 9.6x and far below its 17.2x average.
That makes BMO’s math less demanding than it sounds. $118.39 at 9.9x works out to $11.92 of earnings a share over the next twelve months. Divide $190 by $11.92, and the target implies 15.9x, below the five-year average.
Plausible, but stretched
The risk is that the big brands keep losing volume as costs rise: Hankinson put depreciation from the new Veracruz brewery, due early next fiscal year, at about $75 million a year.
BMO’s target looks plausible to me, but stretched. It asks for a modest multiple, and earnings are holding. But a re-rating needs a reason, and flat sales guidance with Corona and Modelo still shrinking doesn’t give the market one yet.
Watch the fiscal third-quarter report. If depletions turn positive and Constellation lands at the high end of its range, $190 gets a lot easier to defend.
So what is Constellation Brands stock actually worth?
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