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Berkshire Bought the Dip—Now Constellation Brands Is Rebounding
Author: Leo Miller. Posted: 1/9/2026.
Quick Look
- Constellation Brands is rebounding sharply in early 2026 after a 36% loss last year, with its Q3 earnings beating expectations.
- Berkshire Hathaway increased its stake in STZ despite the stock’s downturn, signaling long-term confidence in its recovery potential.
- Strong beer segment performance, improving margins, and analyst price targets point to upside, even as broader alcohol demand remains uncertain.
After a disastrous 2025, shares of beer giant Constellation Brands (NYSE: STZ) are starting 2026 on a much brighter note. To the chagrin of Berkshire Hathaway (NYSE: BRK.B), Constellation delivered a total return of -36% last year. Prior to Warren Buffett's retirement, Berkshire initiated a position in Constellation during Q4 2024. As of September 2025, Berkshire held 13.4 million Constellation shares, valued near $1.8 billion at the time.
General weakness in the beer market and among Constellation's customer base contributed to the stock's decline. Constellation lowered its full-year fiscal 2026 (FY2026) guidance in September 2025 because of the difficult environment it faces. Note that the firm's fiscal year is several quarters ahead of the calendar year.
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However, as of the Jan. 8 close, Constellation shares were up more than 7% in 2026. The stock has now rebounded roughly 16% since hitting a 2025 low near $128 in November. The firm's latest earnings report also sent shares up 5.3%. Let's break down Constellation's newest results to get an updated view on the stock.
Constellation Delivers an Impressive Bottom-Line Beat
In Q3 FY2026, Constellation reported net revenue of $2.22 billion, a 10% decline year over year that nevertheless topped analysts' expectations by about $52 million. The consumer staples company reported comparable earnings per share of $3.06, down roughly 6% from a year earlier but well above consensus estimates of $2.63 (which implied a 19% decline).
The company's beer segment, which accounted for about 90% of revenue, saw sales fall 1%. However, that decline was smaller than the rest of the beer industry, allowing Constellation to gain dollar share. Amid a weak backdrop, Constellation's beer business has consistently outperformed: in Q1 and Q2 FY2026 Constellation led the beer category in dollar share gains, and the same trend held true in FY2025. Although sales declined, the beer segment's operating margin ticked up by 10 basis points, reflecting solid cost management.
The firm's Wine and Spirits segment dragged on overall growth, with sales down 51%—largely the result of Constellation's divestment of SVEDKA vodka and parts of its wine portfolio. Excluding those divestitures, sales in the segment fell about 7%. Applying those exclusions companywide, sales were down roughly 2% versus the reported 10% decline. In other words, Constellation's performance was stronger than the headline numbers suggest.
Coming Off Multi-Year Lows, STZ Could Have Room to Run
Trading around $148, Constellation has only partially recovered from its 2025 low near $128. That low was not only the stock's weakest level last year; it was the lowest since April 2020, shortly after the COVID-19 market crash in March.
Put differently, Constellation is rebounding from a multi-year drawdown rather than a brief dip — a recovery that leaves meaningful upside potential if the rally continues.
Berkshire Buys and Price Targets Support the Bull Case
Berkshire bought more than 6 million Constellation shares in Q1 2025. In that quarter the stock's lowest closing price was $158, roughly 7% above today's trading level — suggesting Berkshire bought shares at a higher cost basis than current prices.
Since then, Berkshire has increased its stake, signaling continued confidence despite the recent decline. That activity suggests Berkshire still sees meaningful appreciation potential for Constellation.
Wall Street analysts also see upside: the MarketBeat consensus price target of about $182 implies roughly 23% upside from current levels.
Still, the beer industry faces headwinds. A recent Gallup survey found only 54% of Americans reported drinking alcohol—the lowest share on record. That said, similar lows have occurred before and later rebounded, suggesting drinking trends can be cyclical rather than structural. A recovery in consumption would be a strong tailwind for Constellation.
Taken together—Constellation's track record of beer share gains, disciplined cost management and current valuation—the company's outlook skews to the upside.
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