Over the last six months, Constellation Brands’s shares have sunk to $130.62, producing a disappointing 16.4% loss - a stark contrast to the S&P 500’s 13.1% gain. This might have investors contemplating their next move.
Is there a buying opportunity in Constellation Brands, or does it present a risk to your portfolio? See what our analysts have to say in our full research report, it’s free.
Why Is Constellation Brands Not Exciting?
Even though the stock has become cheaper, we’re passing on Constellation Brands for now. Here are three reasons why STZ doesn’t excite us, plus one stock we’d rather own.
1. Core Business Falling Behind as Organic Growth Slumps
When analyzing revenue growth, we care most about organic revenue growth. This metric captures a business’s performance excluding one-time events such as mergers, acquisitions, and divestitures as well as foreign currency fluctuations.
The demand for Constellation Brands’s products has barely risen over the last eight quarters. On average, the company’s organic sales have been flat. 
2. Projected Revenue Growth Is Slim
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect Constellation Brands’s revenue to rise by 1.1%. Although this projection indicates its newer products will catalyze better top-line performance, it is still below average for the sector.
3. EPS Barely Growing
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Constellation Brands’s EPS grew at 3.3% compounded annual growth rate over the last three years. On the bright side, this performance was better than its 1.9% annualized revenue declines and tells us management adapted its cost structure in response to a challenging demand environment.
Final Judgment
Constellation Brands isn’t a terrible business, but it isn’t one of our picks. After the recent drawdown, the stock trades at 11.8× forward P/E (or $130.62 per share). While this valuation is reasonable, we don’t really see a big opportunity at the moment. We’re fairly confident there are better stocks to buy right now. We’d suggest looking at our favorite semiconductor picks and shovels play.
Stocks We Like More Than Constellation Brands
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