Constellation Brands, Inc. (STZ): A Bull Case Theory

We came across a bullish thesis on Constellation Brands, Inc. on slo capital’s Substack by Justin. In this article, we will summarize the bulls’ thesis on STZ. Constellation Brands, Inc.'s share was trading at $133.02 as of September 18th. STZ’s trailing and forward P/E were 18.50 and 11.38 respectively according to Yahoo Finance.

Constellation Brands (STZ), owner of Corona, Modelo, Pacifico, and a premium portfolio of wines and spirits, is currently trading at its lowest EV/EBIT multiple in history, around 10.5x, below even 2008/09 financial crisis levels. This presents a rare opportunity to acquire a high-quality, durable business at a historically depressed valuation.

The company’s moat is anchored in brand power and distribution. Iconic brands like Modelo are deeply embedded in consumer culture, creating generational loyalty that is nearly impossible for competitors to replicate. Constellation’s North American distribution network further strengthens this advantage, controlling shelf space in grocery stores and tap handles in bars—assets that are scarce and defended aggressively.

The valuation disconnect appears driven by short-term concerns around consumer spending, weight-loss trends, and debt, yet the business has consistently demonstrated resilient margins, free cash flow, and balance sheet strength. Growth is being fueled by Modelo overtaking Bud Light as America’s top beer, ongoing premiumization in the alcohol sector, rational portfolio optimization in wine and spirits, and international expansion of Mexican beer brands. Free cash flow for FY2024 is projected at $2.3 billion, with mid-single-digit growth in beer and improving margins in wine/spirits. A conservative Buffett-style valuation using a 10% discount rate suggests intrinsic equity value of roughly $36 billion, close to the current market capitalization of $42–43 billion.

Even modestly higher growth would push intrinsic value above $50 billion, implying a 20–25% margin of safety. Constellation’s combination of durable brands, sticky distribution, and global growth potential, now mispriced by the market, creates a compelling risk/reward scenario. While near-term risks exist, the company’s strong moat, disciplined management, and reliable cash flow make it an attractive long-term investment opportunity.

Previously we covered a bullish thesis on Constellation Brands, Inc. (STZ) by RepresentativeAd4940 in March 2025, which highlighted the company’s dominant beer brands, strong brand loyalty, resilient cash flows, and attractive valuation after one-time impairments. The stock has depreciated approximately 25% since coverage due to short-term market concerns. The thesis still stands as STZ’s moat and financial strength remain intact. Justin shares a similar bullish view but emphasizes historically low EV/EBIT multiples, brand momentum, and global growth potential.

Constellation Brands, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 42 hedge fund portfolios held STZ at the end of the second quarter which was 44 in the previous quarter. While we acknowledge the potential of STZ as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.