stock? Below, we examine the numbers and explain why long-term shareholders may want to hold steady. Data on Berkshire’s portfolio is as of June 30, 2025; Constellation’s guidance reflects midpoint estimates unless otherwise noted.
Constellation Lowers Optimistic Outlook to Industry Norms
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Constellation owns some of the world’s most popular Mexican beer brands—Corona, Modelo and Pacifico. In a recent press release, it provided downgrades to its fiscal 2026 guidance (through February 2026). Its comparable earnings per share (EPS) guidance now stands at $11.45, about a 10.2% drop from the prior midpoint estimate.
The company now expects net beer sales to decline by 3%, versus the 1.5% growth previously projected. Beer operating income is forecast to fall 8%, compared with a 1% increase forecast before. Free cash flow is now pegged at $1.35 billion, nearly 13% below past estimates.
Constellation blamed “a challenging macroeconomic environment” for the guidance cut. The firm has seen a steady decline in high-end beer sales in recent months, especially among Hispanic consumers—who have cut back on spending more than the general population. Since roughly 50% of Constellation’s U.S. revenue comes from Hispanic consumers, the impact has been material.
While these revised figures are disappointing, Constellation’s outlook now aligns with the broader beer category. Its earlier guidance implied outsized growth, so this normalization may help stabilize performance amid the downturn.
Additionally, Constellation is gaining market share in key retail channels. From March through mid-August, it achieved the largest market-share gain of any U.S. beer company, signaling growth among non-Hispanic consumers despite broader headwinds.
Buffett Buys Constellation’s Q2 Drop With Long-Term PerspectiveWhile Buffett and Berkshire haven’t publicly detailed their thesis on Constellation, their investment style is clear: make long-term bets and weather short-term volatility. About $204 billion—or 79%—of Berkshire’s $257 billion portfolio has been held for at least five years.
When Constellation’s shares dropped 11% in Q2, Berkshire added roughly 1.4 million shares, bringing its total stake to 13.4 million shares. That move underscores the firm’s willingness to buy the dip rather than flee.
Long-term demographic trends also support the case for Constellation. U.S. Census data shows the Hispanic population grew 1.8% from 2022 to 2023, versus 0.2% growth for the non-Hispanic population. Analysts project continued Hispanic population growth over the coming decades, regardless of immigration policy, which bodes well for Constellation, given Hispanic consumers make up about half of its U.S. sales.
However, these demographic tailwinds will play out over many years, so investors need a long-term horizon. Near-to-mid-term headwinds—such as current immigration policy—could persist.
Constellation’s Forward P/E Is Near Rock-Bottom LevelsAt roughly 12.5× forward price-to-earnings, Constellation trades well below its five-year average forward P/E of about 19.5× and sits just above its five-year low of 11.5×. On valuation alone, the stock looks like a compelling long-term value opportunity rather than one to flee. |
