Does Constellation Brands Slump of Over 40% Signal a Long Term Opportunity in 2025

• If you are wondering whether Constellation Brands is quietly turning into a value opportunity or just a classic value trap, you are in the right place.
• The stock has bounced about 2.4% over the last week and 6.9% over the past month, but that is set against a much steeper slide of around 38.0% year to date and roughly 40.9% over the last year that has shaken a lot of holders confidence.
• Recently, investors have been digesting a mix of macro headwinds for consumer staples and shifting sentiment around premium alcoholic beverage demand. Both of these factors have weighed on Constellation Brands share price. At the same time, commentary around portfolio focus, capital allocation and brand positioning has kept the stock firmly on value investors radar as they reassess the long term story.
• Our Simply Wall St valuation checks give Constellation Brands a 4/6 value score, suggesting the market may be underestimating parts of the business. We will walk through DCFs, multiples and other methods to see why, before finishing with a more intuitive way to think about what the stock is really worth.

Find out why Constellation Brands's -40.9% return over the last year is lagging behind its peers.

Approach 1: Constellation Brands Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, DCF, model projects a companys future cash flows and then discounts them back to todays dollars to estimate what the entire business is worth right now.

For Constellation Brands, the latest twelve month Free Cash Flow is about $1.63 billion. Analysts see this rising steadily, with Simply Wall St combining analyst forecasts for the next few years and then extrapolating further out. On these assumptions, projected Free Cash Flow reaches roughly $2.88 billion by 2035, with key interim years such as 2030 expected around $2.52 billion, all in $ and expressed before discounting.

Those future cash flows are then discounted using a 2 stage Free Cash Flow to Equity model. This produces an estimated intrinsic value of about $332.88 per share. Compared with the current market price, this implies roughly a 58.5% discount, suggesting investors are pricing in significantly weaker prospects than the cash flow outlook implies.

The valuation takeaway, based purely on DCF, is that Constellation Brands stock appears materially mispriced on the downside.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Constellation Brands is undervalued by 58.5%. Track this in your watchlist or portfolio, or discover 918 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Constellation Brands.

Approach 2: Constellation Brands Price vs Earnings

For a profitable company like Constellation Brands, the price to earnings (PE) ratio is a useful way to gauge what investors are willing to pay for each dollar of current earnings. In general, companies with stronger, more reliable growth and lower perceived risk can justify trading on a higher PE, while slower growing or riskier businesses tend to deserve a lower multiple.

Constellation Brands currently trades on a PE of about 19.7x, which is slightly above the Beverage industry average of roughly 17.6x and broadly in line with the peer group average of around 19.7x. At first glance, that suggests the market is valuing the stock similarly to its closest comparables.

Simply Wall St goes a step further by estimating a Fair Ratio of 21.7x for Constellation Brands. This is a proprietary view of what the PE should be after factoring in the company’s earnings growth profile, profitability, risk characteristics, industry context and market capitalization. Because this Fair Ratio is meaningfully higher than the current PE, it implies the market is not fully reflecting the company’s fundamentals in its present valuation.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1443 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Constellation Brands Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives, an easy tool on Simply Wall St’s Community page that lets you turn your view of a company into a clear story behind the numbers. It links what you believe about its brands, strategy and risks to a specific forecast for future revenue, earnings and margins, and then to a fair value that you can compare with today’s price. For Constellation Brands, one investor might build a bullish Narrative that leans into cost savings, brewery expansion and resilient beer demand to justify a fair value closer to the high end of analyst targets near $247. Another, more cautious investor might focus on tariffs, softer consumption and guidance cuts to land nearer the low end around $123. Both can immediately see how their story translates into numbers and a concrete decision framework, and everything updates dynamically when new news or earnings arrive.

Do you think there's more to the story for Constellation Brands? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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