3 Reasons STZ is Risky and 1 Stock to Buy Instead
Since December 2025, Constellation Brands has been in a holding pattern, posting a small return of 2.9% while floating around $146.70. The stock also fell short of the S&P 500’s 9.3% gain during that period.
Is there a buying opportunity in Constellation Brands, or does it present a risk to your portfolio? Get the full stock story straight from our expert analysts, it’s free.
Why Is Constellation Brands Not Exciting?
We’re sitting this one out for now. Here are three reasons you should be careful with STZ, plus one stock we’d rather own.
1. Core Business Falling Behind as Organic Growth Slumps
When analyzing revenue growth, we care most about organic revenue growth. This metric captures a business’s performance excluding one-time events such as mergers, acquisitions, and divestitures as well as foreign currency fluctuations.
The demand for Constellation Brands’s products has barely risen over the last eight quarters. On average, the company’s organic sales have been flat.
2. Projected Revenue Growth Shows Limited Upside
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect Constellation Brands’s revenue to stall. This projection doesn’t excite us and indicates its newer products will not accelerate its top-line performance yet.
3. Previous Growth Initiatives Haven’t Impressed
Growth gives us insight into a company’s long-term potential, but how capital-efficient was that growth? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).
Constellation Brands historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 9%, somewhat low compared to the best consumer staples companies that consistently pump out 20%+.
Final Judgment
Constellation Brands isn’t a terrible business, but it isn’t one of our picks. With its shares lagging the market recently, the stock trades at 12.6× forward P/E (or $146.70 per share). This valuation is reasonable, but the company’s shakier fundamentals present too much downside risk. We’re pretty confident there are superior stocks to buy right now. Let us point you toward one of our all-time favorite software stocks.
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