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Berkshire Bought the Dip—Now Constellation Brands Is Rebounding
Reported by Leo Miller. Publication Date: 1/9/2026.
Summary
- 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 stronger note. To the disappointment 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.
Broad weakness in the beer market and among Constellation's customers contributed to the stock's decline. Constellation lowered its full-year fiscal 2026 (FY2026) guidance in September 2025 because of that difficult environment. Note that the firm's fiscal year is several quarters ahead of the calendar year.
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See JC's latest market forecast hereHowever, as of the Jan. 8 close, Constellation shares are up more than 7% in 2026. The stock has rebounded roughly 16% since hitting a 2025 low near $128 in November. The firm's latest earnings report also pushed shares up 5.3%. Below, we break down Constellation's latest results and what they mean for the stock.
Constellation Delivers an Impressive Bottom-Line Beat
In Q3 FY2026, Constellation reported net revenue of $2.22 billion, a 10% decline but roughly $52 million above analysts' expectations. Comparable earnings per share came in at $3.06, down about 6% year over year but well ahead of the $2.63 consensus (which implied a 19% decline).
Constellation's beer segment, which accounts for about 90% of revenue, saw sales fall 1%. That decline was smaller than the rest of the beer industry, allowing Constellation to gain market share. Across a weak backdrop, the company's beer business has consistently outperformed: in Q1 and Q2 FY2026 the company led the beer category in dollar share gains, as it did in FY2025. Although sales dipped, the beer segment's operating margin rose 10 basis points, showing effective cost management.
What weighed on total growth was the Wine and Spirits segment, where sales fell 51%—largely due to Constellation's divestment of SVEDKA vodka and parts of its wine portfolio. Excluding those divestments, wine and spirits sales declined about 7%. On a company-wide basis excluding those items, sales were down roughly 2%, considerably better than the reported 10% decline. Overall, Constellation performed solidly in the quarter.
Coming Off Multi-Year Lows, STZ Could Have Significant Upside
Trading around $148, Constellation has only partially recovered from its 2025 low near $128. That low was not just a short-term trough; it was the stock's weakest level since April 2020, just after the March COVID-19 market crash.
In other words, Constellation is bouncing back from a historic drawdown rather than a brief pullback, which leaves considerable potential for further upside if its recovery continues.
Berkshire Buying and Analyst Targets Add to the Bull Case
Berkshire bought more than 6 million Constellation shares in Q1 2025. The lowest closing price that quarter was $158—about 7% above the stock's current level—meaning Berkshire likely paid higher prices than today's trading levels.
Since then, Berkshire has expanded its Constellation position, signaling continued confidence despite the stock's decline. That institutional backing suggests Berkshire still sees meaningful appreciation potential for the company.
Wall Street analysts back that view: the MarketBeat consensus price target of roughly $182 implies about 23% upside from current levels.
There are headwinds, though. A recent Gallup poll found just 54% of Americans report drinking alcohol—the lowest on record. However, similar lows have occurred before and later reversed, suggesting the trend may be cyclical rather than structural. A recovery in consumption would be a meaningful tailwind for Constellation.
Combined with the company's track record of beer share gains and its current valuation, Constellation's outlook leans to the upside.
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