Famed investor Jim Cramer has a “perfectly plausible explanation” for why Constellation Brands (STZ) shares initially slipped on Q2 earnings but has turned green again this morning.
The alcoholic beverage specialist recorded $3.74 per share of earnings (EPS) on $2.63 billion sales late on October 6 – both comfortably ahead of Street estimates.
As of writing, Constellation Brands stock is still down well over 15% versus the start of this year.
What helped STZ stock reverse its initial post-Q2 dip?
According to the Mad Money host, investors bailed on STZ shares initially because the company did not raise its guidance for the full year.
For them, it was a signal that “this may be the last good number,” he argued on CNBC today.
However, on the earnings call this morning, management said Constellation Brands Inc will likely come in at the top end of its range given “if momentum continued in September.”
This helped the stock reclaim its after-market losses from last night.
Note that Constellation Brands expects its EPS to fall between $11.2 and $11.9 in its fiscal 2027 – while sales are seen keeping flat at the midpoint of its guided range.
Why Cramer is dovish on Constellation Brands shares
Despite management’s reassurance, Jim Cramer remains bearish on Constellation brands shares – cautioning against buying them at current levels.
Amidst the rising popularity of GLP-1 weight-loss treatments, and a younger generation that treats its body as its temple, the company faces a rather challenging backdrop, he noted on “Squawk on the Street.”
Plus, beer margins are just not that great; we don’t have the growth we used to have,” which makes STZ even less attractive as a long-term holding in late 2026, he explained.
Even from a technical perspective, the beer, wines, and spirits specialist currently sits firmly below its key moving averages (MAs), indicating bears remain decisively in control across multiple time-frames.
All in all, “there are a lot of issues” with Constellation Brands, Cramer concluded.
SpikedAde acquisition: is it really bullish for STZ?
Investors should also note that Constellation Brands is spending roughly $75 million on SpikedAde acquisition.
This risks repeating past beverage industry missteps: committing funds to category near its cyclical peak.
While ready-to-drink options dominate retail shelf space, consumer preferences in low-alcohol and flavoured beverages shift rather quickly – leaving major distributors vulnerable to sudden demand cliff-edges once initial novelty fades.
Paying $75 million upfront with a total deal potential of $353 million signals STZ may actually be overextending balance sheet flexibility to chase inorganic volume growth as beer margins stabilize.
If SpikedAde’s momentum falters under broader distribution, the transaction could stall cash flow allocation toward higher-margin core brands, yielding muted returns on a high-cost fad.
That said, Wall Street currently rates STZ stock at overweight, with a bullish mean price target of about $160.
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