Constellation Brands stock maintains Buy rating at Goldman despite earnings miss

Investing.com - Constellation Brands (NYSE:STZ), currently trading at $173.85 with a market cap of $30.8 billion, received a reiterated Buy rating from Goldman Sachs on Wednesday, maintaining its $225.00 price target despite the company reporting disappointing first-quarter results. According to InvestingPro data, analysts maintain a bullish consensus with price targets ranging from $170 to $300.

The alcoholic beverage company reported first-quarter earnings per share of $3.22, falling short of Goldman Sachs’ estimate of $3.45 and the consensus estimate of $3.31. The company missed both top and bottom line expectations, though Goldman noted many investors had feared worse results. InvestingPro analysis reveals that 12 analysts have recently revised their earnings expectations downward for the upcoming period, though net income is still expected to grow this year.

Constellation Brands reaffirmed its comparable fiscal year 2026 guidance, which Goldman Sachs described as surprising to investors given the first-quarter performance. Management indicated the first-quarter results were largely anticipated internally.

The maintained guidance implies faster organic net sales growth of approximately 0.5% for the remainder of the year, compared to the 4% decline in the first quarter. For the beer segment specifically, the guidance suggests net sales growth of approximately 3%, rebounding from a 2% decline in the first quarter.

Goldman Sachs highlighted that Constellation Brands currently trades at a 13% discount to alcohol industry peers on a forward price-to-earnings basis, significantly below its three-year historical average discount of 1%. The firm views this valuation as compelling, particularly considering the company’s growth prospects relative to competitors. InvestingPro analysis suggests the stock is currently fairly valued, with additional insights available in the comprehensive Pro Research Report, which covers what really matters about this and 1,400+ other top stocks.

In other recent news, Constellation Brands reported its first-quarter fiscal 2026 earnings, revealing an earnings per share (EPS) of $3.22, which fell short of the anticipated $3.41. The company’s revenue also missed expectations, coming in at $2.52 billion compared to the forecasted $2.56 billion. Despite these misses, Constellation Brands maintained its full-year guidance, emphasizing operational improvements and strategic hedging to mitigate risks. The company introduced new products that positively contributed to market share growth, particularly in the high-end light beer segment. Following the earnings announcement, BofA Securities raised its price target on Constellation Brands to $182, maintaining a Neutral rating. BofA also adjusted its full-year EPS estimate from $12.66 to $12.75, expecting beer sales to grow at the low end of the company’s outlook range. The firm expressed some skepticism regarding beer depletions, noting a decline in quarter-to-date retail volumes. Despite these challenges, Constellation Brands remains optimistic about potential tailwinds from the California wildfire reconstruction.

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