🚨 The "Growth" Story is Over 🚨

$Constellation(STZ)$ The Big Picture:

Constellation Brands is hitting a wall. For years, the story was about explosive growth (especially Modelo). Now, that engine is stalling, and the company is switching to "defense mode" to protect profits. They recently wrote off $2.7 billion in bad investments (mostly in their Wine & Spirits business), which basically means they admitted those past strategies failed completely.

The 4 Red Flags You Need to Know:

1. The "Cash Cow" is Slowing Down 🐄

The Beer business (Modelo/Corona) is their main moneymaker. In early 2025, sales volume was growing at +6.4%. By late 2025, it flipped to shrinking by -2.7%. When your best product starts selling less, it's a major warning sign.

2. The "Kitchen Sink" Write-Off 📉

They just took a massive $2.7 billion loss on paper for their Wine & Spirits division. This is management "cleaning house"—admitting that the premium wine strategy didn't work and getting the bad news out of the way all at once.

3. Hidden Costs Are Rising 💸

New tariffs (taxes on imports) are expected to cost them an extra $90 million next year. On top of that, their profit margins on beer are getting squeezed (dropped from 42.6% to 40.6%). They are cutting costs to try and fix this, but it might not be enough.

4. "Creative" Accounting 🎨

They stopped reporting their pot stock investments (Canopy Growth) as a main business segment, which hides some of the losses. Also, while the CEO talks about "record results," the actual number of wine cases sold dropped by nearly 12%.

The Bottom Line:

Constellation Brands is no longer a high-growth rocket ship. It has turned into a "fix-it" project. They are trying to sell off bad brands and cut costs to stay profitable, but fewer people are buying their beer right now.

⚠️ Watch This Number Next Quarter: Beer Profit Margin.

It is currently at 40.6%. If it drops below 38.5%, it means their cost-cutting plan isn't working fast enough to handle the new tariffs and slowing sales.

Verdict: Proceed with caution. The "easy money" growth phase is gone.