Headwinds remain, but Constellation Brands banks on brand loyalty to carry it through -- analysts

[Corona Cerveza Beer Bottle on the beach near the sea. Cold beer on sunset background in the sand. Corona Extra Coronita Mexican Lager Bottle Glass.]
Maksim Safaniuk

The two biggest takeaways from Constellation Brands’ (NYSE:STZ [https://seekingalpha.com/symbol/STZ]) fiscal second quarter [https://seekingalpha.com/news/4502128-constellation-brands-delivers-better-than-feared-results-sets-mixed-fy26-guidance] results were the impact on beer sales from a dwindling Hispanic market, and better than expected beer depletions.

Otherwise, Constellation Brands’ (NYSE:STZ [https://seekingalpha.com/symbol/STZ]) “not as bad as feared” results fueled a positive reaction in shares after the close on Monday and into Tuesday even as the company warned of the continued hurdles it faces from a “challenged socioeconomic environment.”

“There's just a tremendous amount of concern about socioeconomic issues really across the board, and our view is that's the significant thing that's been challenging both for us and for the category in general,” CEO William Newlands said on the company’s earnings call [https://seekingalpha.com/article/4828294-constellation-brands-inc-stz-q2-2026-earnings-call-transcript]when asked about the impact ICE raids had on the company’s beer business.

“We've got a consumer base that's pulling in a bit and they are not engaging,” Newlands warned.

While Constellation (NYSE:STZ [https://seekingalpha.com/symbol/STZ]) attributed the topline weakness to the difficult environment, specifically for its core Hispanic consumer, Morgan Stanley’s Dara Mohsenian, thinks there are additional long-term headwinds for the company, including health and wellness priorities, less demand from younger consumers, cannabis substitution, and high-end beer consumption.

“All these points drive weak beer category trends, on top of the maturation of STZ’s brand portfolio at a larger volume base,” Mohsenian says.

And then there are the tariffs.

The company warned that tariffs on glass, aluminum, and cross-border alcohol imports will cost around $90M per year.

And with higher fixed costs spread across fewer sales, the company expects operating income to be close to zero.

“For our analysis, that is not exactly something we would like to see,” said Seeking Alpha analyst Luca Socci, [https://seekingalpha.com/author/luca-socci] as it “shifts even more pressure on the beer segment to deliver good results, being the only driver of the company’s earnings.”

The good news, however, is that Constellation Brands (STZ [https://seekingalpha.com/symbol/STZ]) is positioned to execute in this challenging environment.

First, the company intends to invest further in marketing and innovation, a key element for the beer/spirits business.

Second, the underwhelming Q2 results means Q2 2026 comparisons will be easier.

And finally, the lowered/lackluster guidance set a low bar for the end of the year results.

Constellation (STZ [https://seekingalpha.com/symbol/STZ]) is also confident that brand loyalty will carry it through the lean times.

“Our loyalty is up with Corona in the general market…our loyalty is up with Hispanic consumers with Modelo..and we have twice the share of Gen Z as part of our overall mix versus the industry average. So we’re sitting on a good spot as the consumer turns around and gets more comfortable with where they are,” Newlands said on the call.

So, despite the tough backdrop, “the print shows management can execute,” Jefferies’ Kaumil Gajrawala said.

The results did little to alter Wall Street analysts' or Seeking Alpha authors' outlook on Constellation Brands (STZ [https://seekingalpha.com/symbol/STZ]) with most remaining largely Neutral to positive. Seeking Alpha's Quant rating, however, views Constellation (STZ [https://seekingalpha.com/symbol/STZ]) as a Strong Sell with a Quant score of just 1.43 out of 5.

MORE ON CONSTELLATION BRANDS

* Constellation Brands, Inc. 2026 Q2 - Results - Earnings Call Presentation [https://seekingalpha.com/article/4828336-constellation-brands-inc-2026-q2-results-earnings-call-presentation]
* Constellation Brands, Inc. (STZ) Q2 2026 Earnings Call Transcript [https://seekingalpha.com/article/4828294-constellation-brands-inc-stz-q2-2026-earnings-call-transcript]
* Constellation Brands: The Limits Of A Beer-Only Story [https://seekingalpha.com/article/4828246-constellation-brands-the-limits-of-a-beer-only-story]
* Constellation Brands signals intent to sustain marketing investment and price pack architecture amid macro headwinds [https://seekingalpha.com/news/4502415-constellation-brands-signals-intent-to-sustain-marketing-investment-and-price-pack]
* Constellation Brands delivers better-than-feared results, sets mixed FY26 guidance [https://seekingalpha.com/news/4502128-constellation-brands-delivers-better-than-feared-results-sets-mixed-fy26-guidance]