Diageo looks like a high-quality but not cheap defensive business with notable constraints in profitability and balance sheet strength. On valuation multiples, we do not have current TTM P/E, P/S, P/B, and P/FCF values, so the direct signal of overvaluation or undervaluation from these is limited, but the very absence of up-to-date data lowers confidence in the assessment. The debt burden remains elevated: debt/equity is 1.53, which is materially above the industry median, although the metric has improved slightly from 1.74 to 1.53 over several periods. The quick ratio of 0.62 is below the industry median and points to weak immediate liquidity, although the current ratio of 1.60 looks acceptable and is even better than the industry average. The weakest area is profitability: ROE, ROA, ROI, and net worth are all zero in the data, which does not allow us to confirm sustainable capital generation and looks extremely weak for valuation purposes. At the same time, the absolute figures for revenue, EBITDA, gross profit, operating income, and net income also do not show positive momentum in the provided series, which limits re-rating potential. There is dividend yield, but it is moderate and does not seem sufficient to compensate for the weak visible profitability and debt burden. On the other hand, assets and equity are present at meaningful levels, and total assets and equity have generally been maintained over recent periods without sharp deterioration. This suggests that the business remains large-scale and financially stable at a basic level, but without clear drivers of profit acceleration. For an investor, this is more a story of stability and dividend support than of strong valuation growth. Therefore, the target forecast should be lowered slightly: fundamentals do not yet justify aggressive upside, and the risks related to margins and leverage outweigh the moderately positive signals from liquidity and the balance sheet.

Diageo plc

Сильный индекс, без изменений. Быки крепко уверены в своих позициях.

Strong index, flat. The bulls are very confident in their positions.

Сильный индекс, значительно упал. Рынок не поддерживает быков.

Strong index, significantly down. The market does not support the bulls.

Сильный индекс, без изменений. Отток средств из лонгов на высоком уровне.

Strong index, flat. Outflow of funds from longs at a high level.

Diageo remains a large and resilient business, but weak visible profitability, high debt, and limited liquidity constrain re-rating potential.

An updated edition of the July 31, 2026, article.
Sin stocks occupy a distinctive corner of the equity market, representing companies tied to products or activities that some investors consider ethically or socially controversial. These businesses often operate in areas such as alcohol, tobacco, gambling and defense. Because demand for many of their products can remain resilient across economic cycles, sin stocks are often viewed differently from conventional investments, with returns shaped by regulation, consumer behavior, cash generation and investor sentiment.
What Are Sin Stocks?
Sin stocks are shares of companies whose primary businesses are associated with products or services that may raise ethical, social or health-related concerns. Tobacco, alcoholic beverages, gambling, firearms and certain defense-related businesses are commonly included in this category. Depending on the definition used, companies involved in areas such as cannabis or adult entertainment may also be considered sin stocks.
There is no separate “sin stock market.” These companies trade on regular stock exchanges alongside companies from other industries. The term groups them according to the nature of their businesses. Their share prices therefore move according to the same basic forces affecting other stocks, including earnings, cash flows, interest rates, valuation, competitive conditions and investor expectations. However, because many of their products enjoy steady demand regardless of economic cycles, sin stocks are often considered relatively defensive investments.
The economics of many sin-stock businesses can be distinctive. Established brands, recurring consumption and high barriers to entry can support relatively steady revenues. At the same time, these companies often face higher taxes, advertising restrictions, regulatory scrutiny, litigation risks and changing social attitudes.
Why Invest in Sin Stocks?
One reason investors consider sin stocks is the potential resilience of demand. Consumption of products such as tobacco, alcohol and gaming services may not move as sharply with economic conditions as spending on many discretionary products. This can provide some stability when broader economic growth slows.
Many established sin-stock companies also generate a significant cash flow. Mature businesses often have relatively limited requirements for rapid expansion, allowing more cash to be directed toward dividends, share repurchases or debt reduction. This can make income generation important part of the investment case.
Valuation can also play a role. Some institutional investors and environmental, social and governance (ESG)-focused funds exclude controversial industries from their portfolios. Reduced investor participation can sometimes leave sin stocks trading at lower valuations than businesses with comparable financial characteristics. That does not automatically make them undervalued, however, because lower valuations may also reflect genuine regulatory, legal or long-term demand risks.
How Is Sin Stock Investing Different?
Sin-stock investing differs mainly in the additional factors investors must consider alongside conventional financial analysis. Revenue growth, margins, balance-sheet strength, free cash flow and valuation remain important, but regulatory and social risks can have an unusually large influence on these businesses.
Government policies can affect product pricing, taxation, advertising, distribution and operating costs. Tobacco companies, for example, may face excise-tax increases and restrictions on product marketing, while gambling companies can be heavily dependent on licensing rules and local regulations. Legal liabilities can also create substantial costs.
Investor perception is another important difference. ESG mandates may prevent certain funds from owning sin stocks regardless of their financial performance. This can affect demand for the shares and influence valuation multiples.
As a result, investing in sin stocks is not simply about buying companies with controversial businesses. It involves assessing whether durable demand, cash generation, competitive advantages and shareholder returns adequately compensate for regulatory, legal, reputational and structural risks. Like any investment strategy, the focus ultimately remains on the relationship between business fundamentals, valuation and risks.
Trends in Sin Stock Sectors
Sin stock sectors are evolving as changing consumer habits, regulation and technology reshape traditional business models. Tobacco companies like Altria Group, Inc. MO are increasingly shifting toward smoke-free products, including heated tobacco and nicotine alternatives, as cigarette volumes decline in many developed markets.
Alcohol companies, including Molson Coors Beverage Company TAP, are balancing premium brands with growing demand for low- and no-alcohol beverages. Gambling is benefiting from the expansion of online betting, mobile platforms and legalized sports wagering in more markets.
Defense companies are seeing sustained demand amid elevated global security concerns and increased military spending. Cannabis businesses continue to face uneven legalization, regulatory complexity and profitability challenges.
Across these sectors, companies are focusing on product innovation, digital engagement, cost efficiency and portfolio diversification. However, regulatory changes, taxation, litigation risks and shifting social preferences remain important factors shaping long-term performance.
If you are looking to capitalize on this trend, our Sin Stocks Screen makes it easy to identify high-potential stocks such as Diageo Plc DEO, Philip Morris International Inc. PM and Churchill Downs Incorporated CHDN.
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Diageo is supported by a powerful global brand portfolio, broad geographic reach and continued investment in innovation. Its leading brands, including Johnnie Walker, Guinness, Don Julio and Smirnoff, provide a strong platform for premiumization, pricing and distribution expansion. The company is targeting evolving consumer preferences through ready-to-drink products, low/no-alcohol offerings and more accessible formats. Geographic diversification remains an important strength, with growth in Europe, Latin America, Africa and India helping offset weakness in North America and China.
Diageo is also pursuing a leaner operating model through restructuring, supply-chain improvements and tighter overhead management. In the medium term, the Zacks Rank #2 (Buy) company’s sales growth is expected to improve as North America stabilizes, while cost savings and better mix should support operating profit growth, cash generation and greater financial flexibility. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Philip Morris is strengthening its long-term growth profile through a continued shift toward smoke-free products, supported by IQOS, ZYN and VEEV. Smoke-free products now contribute a substantial portion to revenues, while the company aims to become majority smoke-free by 2030. Its strategy centers on expanding reduced-risk products, entering additional markets, leveraging Swedish Match and the KT&G partnership, and using productivity savings to fund innovation and commercial investments.
Philip Morris maintains a leading position in heat-not-burn through IQOS, while ZYN and VEEV are broadening its presence across nicotine categories and geographies. Strong pricing, favorable product mix and scale benefits should support the Zacks Rank #3 (Hold) company’s revenues, margins and earnings, although declining cigarette volumes, regulatory pressure and U.S. execution risks remain key challenges.
Churchill Downs is building on its leadership in horse racing and gaming through continued investment in premium racing experiences, historical racing machines, regional casinos and wagering services. The Kentucky Derby remains a powerful flagship asset, supported by record wagering, viewership and sponsorship momentum, while the company’s broader racing and gaming operations provide diversified earnings streams. Churchill Downs is expanding its venue base through projects such as Victory Run at Churchill Downs Racetrack and the Rockingham Grand Casino in New Hampshire, supporting future capacity and revenue growth.
Churchill Downs’ strategy centers on developing and acquiring racing and gaming properties, expanding online wagering capabilities, and leveraging established regional positions. Continued growth across Live and Historical Racing, Wagering Services and Gaming, combined with disciplined development spending, should support the Zacks Rank #3 company’s long-term earnings expansion and cash generation.
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Sin Stock Investing: Finding Opportunities in Controversial Industries

The Boston Beer Company, Inc. SAM has witnessed a decline over the past six months, with its shares falling 17.1%. The stock underperformed the S&P 500 index, which gained 12.2% during the same period, and the Consumer Staples sector, which declined 1.9%. Meanwhile, the broader Beverages - Alcohol industry fell 4.1%.
Boston Beer’s shares are under pressure as it faces several headwinds that are weighing on sales, profitability and investor confidence. The biggest concern is continued weakness in consumer demand, with second-quarter 2026 depletions declining 6% year over year and shipments falling 4.5%. Volume declines across key brands, including Truly, Twisted Tea, Samuel Adams, Hard Mountain Dew and Dogfish Head, highlight broad-based portfolio weakness. SAM continues to face tariff and input-cost pressures.
SAM’s performance is notably weaker than that of its competitors, Anheuser-Busch InBev SA/NV BUD, Diageo plc DEO and Molson Coors Beverage Company TAP, which declined 0.8%, 5.1% and 11.4%, respectively, in the past six months.
Closing at $190.82, SAM stock stands almost 27.8% below its 52-week high of $264.46 attained on April 10, 2026. The company is trading below its 200-day simple moving average of $204.64, signaling bearish sentiment in maintaining the recent performance levels.
What’s Behind SAM’s Dismal Stock Run?
Boston Beer’s shares are declining primarily because of continued weakness in sales volumes across several of its major brands. The company’s second-quarter 2026 depletions fell 6% year over year, while shipments declined 4.5%, indicating that demand remains under pressure. Weakness was seen across brands including Truly, Twisted Tea, Samuel Adams, Hard Mountain Dew and Dogfish Head.
Truly’s ongoing softness remains a major concern, as growth from newer brands such as Sun Cruiser and Angry Orchard has not been enough to fully offset declines in the broader portfolio. The company also reported adjusted earnings per share below analysts’ expectations, adding to investor concerns about near-term profitability.
Simultaneously, Boston Beer continues to face tariff and input-cost pressures, with $20-$30 million expected tariff costs in 2026. Although cost savings and productivity initiatives are helping protect margins, they have not been sufficient to overcome the impact of weaker volumes.
In addition, Boston Beer continues to face broader industry challenges. Shifting consumer preferences across beverage alcohol categories are creating uncertainty around demand for traditional beer, hard seltzers and other established offerings. The company also operates in a highly competitive market, where elevated promotional activity and discounting may be necessary to maintain shelf space and stimulate demand. Increased promotions can weigh on realized pricing and put pressure on profit margins, particularly when combined with weaker volumes.
Finally, the market remains uncertain about Boston Beer’s ability to sustain long-term growth amid continued volume declines, shifting consumer preferences, intense competition and the need to successfully scale newer brands.
SAM’s Growth Levers May Offer Some Cushion
On the flip side, Boston Beer is executing a strategy focused on strengthening its core brands, expanding the Beyond Beer portfolio and driving growth. The company continues to invest in brand equity, introduce new product formats, expand Truly Unruly, support Samuel Adams through targeted marketing and capitalize on major events to increase brand visibility. These initiatives are expected to reinforce its long-term growth prospects.
Boston Beer is focused on the revival of its Samuel Adams and Angry Orchard brands, cost-saving initiatives and long-term innovation. However, these initiatives will translate into growth only if Boston Beer can successfully execute its brand-revival strategy, stabilize volumes across its core portfolio, scale newer products and effectively manage costs and competitive pressures.
SAM’s Estimate Revision Trend & Valuation
The Zacks Consensus Estimate for SAM’s 2026 and 2027 earnings per share has dropped 5.5% and 8.1% to $8.99 and $10.27, respectively, over the past 30 days.
Despite the considerable decline in its share price, Boston Beer still trades at a premium to industry peers with a forward 12-month price-to-earnings (P/E) multiple of 19.45X. The current valuation is below its five-year high of 41.08X but ahead of the broader industry’s multiple of 14.99X.
Image Source: Zacks Investment Research
How to Play SAM Stock Now?
Boston Beer is facing mounting near-term pressures from declining volumes, weakness across key brands, shifting consumer preferences, intense competition and persistent cost headwinds. Earnings estimate cuts and continued uncertainty around the pace of brand recovery have also weighed on investor confidence, while the stock still trades at a premium valuation compared with the broader industry. Although SAM continues to benefit from newer growth brands, product innovation, brand investments and cost-saving initiatives, these positives may take time to materially offset weakness in its core portfolio. Given the uncertain volume and earnings outlook, downward estimate revisions and limited margin of safety at its current valuation, this Zacks Rank #4 (Sell) stock appears less favorable at current levels.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).

Boston Beer Drops 17% in 6 Months: Buy the Dip or Sell the Stock?

Diageo plc DEO reported preliminary fiscal 2026 results, ending June 30, 2026, wherein pre-exceptional earnings per share rose 0.7% year over year to 165.3 cents.
On a reported basis, net sales declined 3% year over year to $19.6 billion. Organic net sales fell 2%, pressured by weakness in North America and the Asia Pacific, partly offset by growth in Europe, Latin America and Africa. Volume declined 0.4%, while unfavorable price/mix reduced performance by 1.6%.
Diageo plc Price and Consensus
The negative price/mix was primarily driven by adverse mix, reflecting weaker performance in US Spirits and softer results elsewhere.
The company delivered a free cash flow of $3.2 billion, up $463 million year over year, supported by disciplined investment and lower capital expenditure. Organic operating profit increased 2%, helped by cost savings from the Accelerate program.
Shares of the Zacks Rank #4 (Sell) company have lost 15.2% in the past year against the industry’s 12.6% growth.
Image Source: Zacks Investment Research
DEO Faces North America Category Pressure
North America remained the biggest challenge for Diageo, with organic net sales declining 8.4% year over year. The decline was driven primarily by US Spirits weakness, particularly in tequila, wherein net sales fell 21.1% due to category softness, increased competition and tougher comparisons.
Within US Spirits, Don Julio net sales declined 19.2% year over year, while Casamigos net sales dropped 27.7%. The company noted that Casamigos price repositioning and a refreshed marketing campaign are being rolled out to improve competitiveness. Meanwhile, Diageo Beer Company USA posted growth, supported by Guinness and Smirnoff RTD performance.
Diageo Delivers Growth Across Key Regions
DEO recorded stronger momentum outside North America, with Europe, Latin America and Africa contributing growth. Europe organic net sales increased 3.4%, supported by Guinness momentum in Great Britain and Ireland, along with strong performance in Türkiye.
Latin America and Caribbean organic net sales grew 7.7%, driven by Brazil and Colombia, while Africa delivered 13.3% organic net sales growth. In the Asia Pacific, organic net sales declined 6.3% due to weakness in Chinese white spirits, which offset strong growth in India.
DEO Expands Margins Through Cost Savings
Diageo’s organic operating profit increased 2% year over year despite lower sales, as cost savings helped offset pressure from adverse mix, inflation and tariffs. The organic operating margin expanded 116 basis points, reflecting benefits from the Accelerate program.
The Accelerate initiative delivered $540 million in savings in fiscal 2026. These savings came from more efficient advertising and promotion spending, supply-chain improvements and lower overhead costs. Advertising and trade investment savings contributed $230 million, supply-chain initiatives added $180 million and overhead actions delivered $130 million.
Diageo Strengthens Cash Position
DEO generated $4.4 billion in net cash from operating activities and $3.2 billion in free cash flow during fiscal 2026. Capital expenditure was $1.2 billion, reflecting a disciplined approach to investment compared with the prior year.
The company ended the year with net debt of $20.5 billion, down $1.4 billion from the prior year. Its leverage ratio improved to 3.1X from 3.4X, supported by strong cash generation. Diageo also recommended a full-year dividend of 50 cents per share under its revised dividend payout policy.
DEO Advances Restructuring Program
Diageo recorded significant exceptional charges in fiscal 2026, including $1.5 billion in impairment charges and $0.9 billion in restructuring costs. The impairment charges were largely related to Türkiye, the Don Papa brand and other smaller brands.
The company is implementing a two-year restructuring program focused on a new operating framework. Diageo expects the revised framework to generate $850 million in savings over two years, beginning in fiscal 2027, allowing investment in competitiveness while supporting operating profit.
Looking ahead, Diageo highlighted the need to improve competitiveness in North America while continuing to build on momentum in Europe, Latin America and Africa. Management expects the operating framework changes and cost savings to support future investment priorities.
Diageo Provides FY27 Outlook
DEO expects fiscal 2027 organic net sales growth to be broadly flat, with North America organic net sales projected to decline in the mid-single-digit range. The company assumes the North American market will decline 3% while improving its share performance from that in fiscal 2026.
The company expects fiscal 2027 organic operating profit growth in the low- to mid-single-digit range, supported by savings from its operating framework changes and supply-chain initiatives. Diageo expects to realize 40% of the $850-million operating framework savings in fiscal 2027, along with approximately 25% of the $150-million supply-chain savings.
For fiscal 2027, DEO forecasts a free cash flow of $2 billion after around $800 million of exceptional cash costs related to operating framework changes and $50 million of exceptional cash costs tied to the supply-chain savings program. The company expects to end fiscal 2027 near the midpoint of its target leverage of 2.5X-3X net debt to EBITDA, assuming completion of the East African Breweries PLC and Royal Challengers Bengaluru transactions.
Over the medium term, Diageo expects low-single-digit organic net sales growth from fiscal 2027 through fiscal 2029, with growth accelerating as North America stabilizes and gains share. The company projects mid-single-digit organic operating profit growth over the period, supported by savings and a more favorable mix, while expecting a free cash flow of $8 billion after around $850 million of exceptional cash costs.
Stocks to Consider
The Vita Coco Company Inc. COCO is the leading coconut water brand in the United States, leveraging its strong brand equity, expanding global presence and asset-light business model to capitalize on the growing demand for healthier hydration beverages. COCO currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for Vita Coco’s current fiscal-year sales and earnings implies growth of 31.6% and 64.7%, respectively, from the year-ago reported figures. COCO has delivered a trailing four-quarter earnings surprise of 21.9%, on average.
The Coca-Cola Company KO is a leading beverage company with a portfolio of 32 billion-dollar brands spanning sparkling beverages, water, sports drinks, dairy and value-added beverages. KO currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Coca-Cola’s current fiscal-year sales and earnings implies growth of 3.6% and 9.7%, respectively, from the year-ago reported figures. Coca-Cola delivered a trailing four-quarter earnings surprise of 4.6%, on average.
Primo Brands Corporation PRMB is a leading North American branded beverage company focused on healthy hydration. It currently has a Zacks Rank #2.
The Zacks Consensus Estimate for Primo Brands’ current fiscal-year sales indicates growth of 1.6% from the prior year’s reported level. PRMB delivered a trailing four-quarter earnings surprise of 7.7%, on average.
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DEO FY26 Preliminary Earnings Show Pressure on North America Weakness

Key Points
In Q1, new CEO Greg Abel exited 15 Buffett stock positions.
Several of those positions paid robust dividends.
Abel has continued to increase Berkshire's cash position.
Well, that was fast. When legendary investor Warren Buffett stepped down as CEO of Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) on Dec. 31, many wondered whether his handpicked successor, Greg Abel, would play it safe for a quarter or two or jump right in with a bold move to differentiate himself from his predecessor.
Turns out Abel made not just one bold move, but 15 once he was in the CEO's chair. In just his first quarter as CEO, he sold 15 positions that Buffett initiated in their entirety, including some 15-year holdings. He also opened new positions in some stocks that weren't on anyone's radar.
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Here's what Abel's moves should tell Berkshire shareholders about the company's future.
Swing for the fences
Abel's 15 sells include some of Berkshire's biggest winners, such as Visa (NYSE: V) and Mastercard (NYSE: MA), as well as its stake in artificial intelligence hyperscaler Amazon (NASDAQ: AMZN). They also include some recent bets that haven't paid off for the company. like residential pool equipment supplier Pool Corp. (NASDAQ: POOL), liquor company Diageo (NYSE: DEO), and pizza chain Domino's Pizza (NASDAQ: DPZ).
This selling spree sends a clear message that Abel won't hesitate to divest positions -- winners or losers -- for which he doesn't anticipate a market-beating return. But it's too early to call this a trend. We'll have to wait a couple of weeks to see whether his second quarter as CEO features similar big moves to his first.
One thing that does seem clear is that he's not really concerned about dividend income.
Dividends vs. cash
Although Buffett never paid a dividend to Berkshire shareholders, he loved owning dividend-paying stocks. "I do believe in dividends in a great many situations, including many of the ones at companies in which we own stock," he said in 2008. Famously, Buffett's position in Coca-Cola (NYSE: KO) now pays Berkshire more in dividends every two years (~$1.7 billion) than Buffett spent on his entire position in the stock (~$1.3 billion).
But some of the stocks Abel dumped were high-dividend-yielders, including Lamar Advertising (NASDAQ: LAMR), Diageo, and Pool, which currently yield 4%, 3.8%, and 2.5%, respectively. By far Abel's biggest buy was Google parent Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), which pays only a 0.2% dividend, and his second-biggest buy was Delta Air Lines (NYSE: DAL), which yields only 1%.
Berkshire's cash position also increased in Q1, from $373.3 billion at the start of the quarter to $397.4 billion at the end, suggesting that Abel is more interested in building up cash right now than in earning a return on that cash in the form of a dividend.
Maybe Abel and Buffett have some big plans for all that cash they've been hoarding. Or maybe they're just concerned about an overvalued market. Either way, investors should expect Abel to chart his own course for the company moving forward.
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John Bromels has positions in Alphabet, Amazon, Berkshire Hathaway, Coca-Cola, Diageo Plc, Domino's Pizza, and Mastercard. The Motley Fool has positions in and recommends Alphabet, Amazon, Berkshire Hathaway, Domino's Pizza, Mastercard, Pool, and Visa. The Motley Fool recommends Delta Air Lines and Diageo Plc. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Greg Abel Sold 15 Buffett Stock Positions in His First Quarter as Berkshire CEO. What His Early Portfolio Moves Signal for Shareholders.

Diageo plc DEO is scheduled to release preliminary results for fiscal 2026 on Aug. 6. The alcoholic beverage company, which reports results on a half-yearly basis, posted top- and bottom-line declines, and lower organic operating profit in the first half of fiscal 2026.
DEO is expected to register declines in the top and bottom lines when it reports fiscal 2026 numbers. The Zacks Consensus Estimate for quarterly earnings has moved down 1.7% in the past 30 days to $6.34 per share.
The consensus estimate for earnings indicates a decline of 3.5% from the year-ago quarter’s reported number. The consensus estimate for Diageo’s quarterly revenues is pegged at $20 billion, which indicates a decline of 1.1% from the figure reported in the prior-year quarter.
Diageo’s Price Performance & Valuation
DEO shares have exhibited a downtrend, falling 9.5% in the past three months, underperforming the broader industry’s growth of 4.6% and the Consumer Staples sector’s decline of 0.6%. The Zacks Rank #4 (Sell) stock has also lagged the S&P 500 index’s growth of 8.5%.
DEO’s 3-Month Stock Price Performance
From the valuation standpoint, DEO trades at a forward 12-month P/E multiple of 13.84X, underperforming the industry average of 15.83X and the S&P 500’s average of 20.28X. Diageo’s valuation appears quite cheap compared with the industry at current levels.
Key Factors to Note
Diageo has been grappling with weak demand in the United States and China, leading to volume declines, an unfavorable sales mix, and continued top-line pressure. These trends are raising concerns over earnings growth and pushing out the timeline for a meaningful recovery. In North America, performance has been hurt by pressure on consumer disposable income, weighing on U.S. spirits demand, while in the Asia Pacific, the growing preference for Chinese white spirits has further impacted sales.
Diageo has revised its near-term outlook downward, reflecting continued demand weakness and macro uncertainty. The company predicted organic sales to decline 2-3%, reflecting further weakness in the United States, including the effects of Chinese white spirits. Additionally, operating profit growth is expected to remain muted, with a flat to low-single-digit increase, mainly driven by the updated net sales guidance and the tariff impacts. Earnings are expected to be impacted by lower operating profit and disposals, signaling limited near-term momentum.
Diageo has been facing sustained margin headwinds from an unfavorable shift in product mix, cost inflation and tariff impacts. Premium categories such as tequila have slowed, reducing the contribution of profitable brands. As consumers shift toward lower-priced alternatives, the mix benefit that historically supported the gross margin is fading, leading to weaker profitability despite relatively stable pricing in some regions.
Input cost inflation, logistics expenses and supply-chain inefficiencies continue to weigh on gross profit. Although operational efficiencies and cost-saving initiatives under the “Accelerate” program are helping offset some of these pressures, they are not fully mitigating the impacts of lower gross margins.
Tariff-related uncertainties, particularly on imports into the United States, also pose incremental risks to cost structures. Even with mitigation strategies in place, tariffs are expected to create additional friction on the operating margin, limiting near-term earnings recovery and keeping profitability under pressure.
Stocks With the Favorable Combination
Here are a few companies, which according to our model, have the right combination of elements to beat on earnings this reporting cycle.
Primo Brands Corporation PRMB has an Earnings ESP of +16.51% and a Zacks Rank #2 (Buy) at present. PRMB is likely to register top-line growth when it releases second-quarter 2026 results. The Zacks Consensus Estimate for quarterly revenues is pegged at $1.76 billion, which implies a rise of 1.8% from the figure reported in the year-ago quarter. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The consensus estimate for Primo Brands’ quarterly earnings has declined a penny in the past 30 days to 34 cents per share, implying a drop of 5.6% from the year-ago quarter’s reported number. PRMB delivered an earnings surprise of 1.4%, on average, in the trailing four quarters.
Kraft Heinz Company KHC currently has an Earnings ESP of +0.82% and a Zacks Rank #2. The company is likely to register declines in the top and bottom lines when it reports second-quarter 2026 numbers. The consensus mark for revenues is pegged at $6.2 billion, which indicates a decrease of 3% from the figure reported in the year-ago quarter.
The Zacks Consensus Estimate for KHC’s quarterly earnings per share of 53 cents implies a decline of 23.2% from the year-ago quarter’s actual. The consensus mark has been unchanged in the past 30 days. KHC has a trailing four-quarter earnings surprise of 10.2%, on average.
Monster Beverage MNST currently has an Earnings ESP of +2.61% and a Zacks Rank #3 (Hold). The company is expected to register growth in its top and bottom lines when it reports second-quarter 2026 results. The Zacks Consensus Estimate for MNST’s quarterly earnings was unchanged in the last 30 days at 59 cents per share, indicating 13.5% growth from the year-ago quarter's reported number.
The consensus estimate for Monster Beverage’s quarterly revenues is pegged at $2.4 billion, implying a rise of 14.5% from the figure registered in the prior-year quarter. MNST reported a negative earnings surprise of 9.6%, on average, in the trailing four quarters.
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Diageo to Report FY26 Earnings: What Should Investors Know?

For Immediate Release
Chicago, IL – July 8, 2026 – Today, Zacks Equity Research discusses Anheuser-Busch InBev BUD, Diageo Plc DEO, Constellation Brands Inc. STZ, Brown-Forman Corp. BF.B and Molson Coors Beverage Company TAP.
Industry: Alcoholic Beverages
Link: https://www.zacks.com/commentary/2949145/5-alcohol-stocks-to-watch-amid-changing-consumer-preferences
Players in the Zacks Beverages – Alcohol industry are navigating a period of structural change as evolving consumer preferences and cost pressures reshape the competitive landscape. Moderation trends, particularly among younger and health-conscious consumers, are weighing on long-term demand for traditional beer, wine and spirits, creating concerns over sustainable volume growth. At the same time, tariffs and elevated costs for packaging, freight, labor and agricultural inputs are pressuring margins, especially for companies with global supply chains and limited pricing power.
However, the industry also offers meaningful growth opportunities through innovation. Expanding demand for ready-to-drink cocktails, and low and no-alcohol beverages is creating revenue streams, while companies that diversify their portfolios and adapt to changing consumption habits are better positioned to offset volume headwinds.
For investors, success will likely depend on companies' ability to balance pricing power, cost discipline and product innovation while capitalizing on evolving consumer preferences. Leading players, including Anheuser-Busch InBev, Diageo Plc, Constellation Brands Inc., Brown-Forman Corp. and Molson Coors Beverage Company, look well-placed to capitalize on these trends.
About the Industry
The Zacks Beverages – Alcohol industry mainly comprises producers, importers, exporters, marketers and sellers of alcoholic beverages like beer, craft beer, ciders, wine, rum, whiskey, liqueurs, vodka, tequila, champagnes, brandy, amaretto, ready-to-drink (RTD) cocktails and malt. Some industry players also produce and sell non-alcoholic beverages like carbonated soft drinks, sparkling waters, bottled water, energy drinks, powdered and natural juices, and RTD teas.
The companies sell products through wholesalers and retailers like supermarkets, warehouse clubs, grocery stores, convenience stores, package stores, drug stores and other retail outlets. The industry participants also sell beer directly to consumers in cans and bottles at restaurants, pubs, bars and liquor stores. Some brewers operate brewpubs or tasting rooms at breweries, offering consumers the freshest beer.
What's Shaping the Future of Beverages - Alcohol Industry
Moderation Trend Pressure Alcohol Consumption: Moderation is becoming a structural headwind for alcohol companies. Younger consumers, particularly Gen Z, are drinking less, and health-conscious buyers across age groups increasingly favor balanced lifestyles. Consumers are shifting occasions away from traditional alcohol, and low or no-alcohol alternatives are gaining share.
For investors, this raises concern over long-term volume growth across beer, wine and spirits. Even if pricing supports revenues, weaker consumption can limit operating leverage and make growth more dependent on innovation. Companies with high exposure to legacy alcohol categories may face slower depletion trends, higher promotional needs and weaker earnings visibility if moderation continues to reshape drinking behavior.
Tariffs Could Squeeze Margins: Tariffs are emerging as a meaningful overhang for U.S. beverage alcohol companies with global sourcing and international supply chains. Higher duties on imported glass bottles, aluminum, packaging materials and select beverage imports can raise input costs, forcing producers to either absorb the increase or pass it on to consumers.
While premium brands have greater pricing flexibility, mass-market labels remain more vulnerable to demand erosion from higher shelf prices. Investors should watch for margin pressure, procurement disruptions and slower earnings growth, particularly among companies with significant import exposure or limited domestic sourcing capabilities.
Beyond tariffs, alcohol producers continue to navigate elevated costs across packaging, freight, labor and agricultural inputs. Although inflation has moderated from peak levels, cost volatility remains a key earnings risk, especially if companies are unable to fully offset higher expenses through pricing. Promotional activity may also increase as consumers become more value-conscious, pressuring the gross margin.
Innovation Beyond Traditional Alcohol Creates Growth Runway: Despite softer industry volumes, beverage companies are unlocking growth opportunities through innovation. Demand for ready-to-drink cocktails continues to outpace most traditional alcohol categories as consumers seek convenience, flavor variety and affordability.
At the same time, low and no-alcohol beverages are evolving into a meaningful profit pool rather than a niche offering, attracting consumers who want moderation without abandoning social drinking. Leading brewers and spirits companies are expanding product portfolios to address these changing occasions, allowing them to capture incremental demand instead of relying solely on traditional alcohol consumption. Successful innovation could offset category pressures and strengthen long-term market positioning.
Zacks Industry Rank Indicates Dull Prospects
The Zacks Beverages – Alcohol industry is a 17-stock group within the broader Zacks Consumer Staples sector. The industry currently carries a Zacks Industry Rank #189, placing it at the bottom 23% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates dull near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the bottom 50% of the Zacks-ranked industries is a result of a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually losing confidence in this group’s earnings growth potential.
Before we present a few stocks that you may want to consider for your portfolio, let us take a look at the industry’s recent stock-market performance and valuation picture.
Industry Underperforms S&P 500
The Zacks Beverages – Alcohol industry has outperformed the broader sector and underperformed the S&P 500 in the past year.
The stocks in the industry have collectively returned 4.1% in the past year, whereas the Zacks Consumer Staples sector has risen 1.6%. Meanwhile, the Zacks S&P 500 composite has rallied 23.9%.
Beverages - Alcohol Industry's Valuation
Based on the forward 12-month price-to-earnings (P/E) ratio, commonly used to value Consumer Staples stocks, the industry is currently trading at 15.27X compared with the S&P 500’s 21.07X and the sector’s 17.26X.
Over the last five years, the industry traded as high as 24.1X, as low as 13.77X and at the median of 18.39X.
5 Alcohol Beverages Stocks to Keep a Close Eye On
None of the stocks in the Zacks Beverages – Alcohol space currently sports a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy). However, we have selected five stocks with a Zacks Rank #3 (Hold) to watch from the same industry. You can see the complete list of today’s Zacks #1 Rank stocks here.
Let us have a look at the companies.
Anheuser-Busch InBev: Also known as AB InBev, this is a global brewing leader with a portfolio of iconic brands spanning diverse geographies. Its leading positions across key markets and expansive global footprint provide meaningful scale advantages, enabling efficient operations and the ability to grow multi-country brands worldwide. The company continues to benefit from resilient consumer demand for its core brands, supported by strong business momentum, driven by disciplined execution, sustained brand investment and an accelerated digital transformation agenda. Premiumization remains a central growth lever, as consumers increasingly trade up within the beer category.
Beyond core beer, AB InBev is steadily expanding its Beyond Beer portfolio, encompassing ready-to-drink offerings, such as canned wines and cocktails, along with hard seltzers, ciders and flavored malt beverages. This diversification strategy is enhancing relevance across occasions and consumer segments, while providing an incremental growth runway and supporting top-line momentum. The Zacks Consensus Estimate for AB InBev’s 2026 sales and earnings suggests growth of 8.4% and 15.8% from the year-ago period’s reported figures. The consensus mark for the company’s 2026 earnings has moved down by a penny in the past seven days. The Zacks Rank #3 stock has gained 15.8% in the past year.
Diageo: The stock of this London-based leading beverage company has declined 22.4% in the past year. DEO operates in approximately 180 countries, and is involved in producing, distilling, brewing, bottling, packaging and distributing spirits, wine and beer. The company continues to place innovation and consumer moderation at the center of its long-term growth strategy, addressing evolving consumption patterns and diversifying its portfolio. Innovation remains a key driver, with strong momentum across tequila, whisky, beer and RTD formats.
Equally important is Diageo’s push into moderation, wherein it has established clear leadership in non-alcoholic spirits. The company is refining its $2-billion productivity program to drive efficiency across the business while ensuring long-term sustainable growth. A key focus is balancing cost savings with strategic reinvestment, particularly in marketing and brand activation. The Zacks Consensus Estimate for Diageo’s fiscal 2027 EPS has edged down 0.3% in the past 30 days. The consensus estimate for fiscal 2027 sales and earnings suggests declines of 1.4% and 1.8%, respectively, from the year-ago period’s reported figures. The company currently has a Zacks Rank #3.
Constellation Brands: The Victor, NY-based third-largest beer company and a leading, high-end wine company in the United States continues to benefit from a sharp focus on brand building and a steady cadence of innovation. The company’s premiumization strategy remains a key growth driver, led by the sustained strength of the Modelo and Corona brand families and continued traction across its Power Brands portfolio. Its beer business is benefiting from premium and above-premium trends, supported by growth in traditional beer and adjacent categories, such as flavored beer, seltzers, RTD spirits and flavored malt beverages.
STZ is actively investing to extend the momentum of its Power Brands, aligning innovation with evolving consumer preferences and delivering successful product launches. Meanwhile, the company’s digital momentum continues to build through platforms, such as Instacart, Drizly and retailer-owned channels, reflecting consumers’ growing preference for convenience-driven purchasing. The Zacks Consensus Estimate for STZ’s fiscal 2027 earnings per share has moved down 0.2% in the past seven days. The consensus estimate for fiscal 2027 earnings suggests a decline of 0.2% from the year-ago period’s reported figure. The Zacks Rank #3 stock has lost 23.4% in the past year.
Brown-Forman: Based in Louisville, KY, this is a global spirits company that manufactures, distills, bottles, imports, exports, markets and sells a broad portfolio of premium alcoholic beverages. The company’s growth strategy is anchored in premiumization, with a clear focus on high-quality, premium and super-premium spirits that support brand equity and margin resilience. The portfolio has been streamlined around core power brands such as Jack Daniel’s and Woodford Reserve, complemented by successful additions like the Jack Daniel’s and Coca-Cola RTD, and the integration of super-premium labels Gin Mare and Diplomático.
Emerging markets continue to provide a strong growth offset, driven by rising middle-class demand and momentum across the Jack Daniel’s family. Disciplined pricing, innovation, distribution evolution and tighter cost-control underpin long-term value creation despite near-term pressures. The Zacks Consensus Estimate for BF.B’s fiscal 2027 sales and earnings suggests growth of 0.4% and 11.8%, respectively, from the year-ago period’s reported figures. The consensus mark for the Zacks Rank #3 company’s fiscal 2026 earnings has moved up 1.8% in the past 30 days. BF.B has declined 9.5% in the past year.
Molson Coors: The stock of this Chicago, IL-based leading beverage company has declined 21.3% in the past year. TAP is on track with its revitalization plan, focused on achieving sustainable top-line growth by streamlining its organization and reinvesting resources into its brands and capabilities. Investments, partnerships and product launches, which are part of its revitalization plan, have been aiding the company.
Molson Coors has been committed to increasing its market share through innovation and premiumization. Intending to accelerate portfolio premiumization, TAP has been aggressively growing its above-premium portfolio in the past few years. The Zacks Consensus Estimate for Molson Coors’ 2026 EPS has been unchanged in the past 30 days. The consensus estimate for the Zacks Rank #3 company’s 2026 sales and earnings suggests declines of 0.1% and 11.4%, respectively, from the year-ago period’s reported figures.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks Industry Outlook Highlights Anheuser-Busch, Diageo, Constellation Brands, Brown-Forman and Molson Coors Beverage

Constellation Brands STZ sits at the center of two important alcohol trends. Beer demand is still carrying the business, while wine and spirits remain in reset mode after portfolio actions.
The question for investors is whether premium brands and cost savings can offset uneven consumer spending, tariffs and higher marketing needs. The latest numbers show both resilience and pressure.
Beer Demand Remains the Main Signal
Beer remains the clearest source of operating strength for Constellation Brands. In first-quarter fiscal 2027, beer net sales increased 2% to $2.28 billion, supported by $40.7 million of shipment volume growth and $17.6 million of pricing gains. Shipments rose 1.8%, while depletions slipped 0.3% in a volatile consumer backdrop.
The brand mix still matters. Modelo Especial and Corona Extra faced declines, but Pacifico, Victoria and Modelo Chelada delivered gains that helped support the portfolio. Management continues to emphasize consumer insights, occasion-based marketing and disciplined investment as it works to keep scaled brands relevant.
Anheuser-Busch InBev SA/NV BUD provides a useful beer benchmark because it also competes through a broad global portfolio and event-driven marketing. Its presence highlights how large brewers are pushing premium, non-alcoholic and occasion-led offerings to defend share.
Constellation Brands Inc Price, Consensus and EPS Surprise
Margins Reflect Relief and New Cost Pressures
Constellation Brands’ margin story is not one-dimensional. Consolidated gross profit as a percentage of net sales rose to 54.3% in the first quarter from 50.4% a year earlier. Comparable operating income increased to $834.2 million from $809.9 million.
Beer operating margin was 39.0%, nearly flat with 39.1% in the prior-year period. Fixed cost absorption and pricing helped, but higher materials costs, tariffs, unfavorable product mix and marketing spending limited expansion. Tariffs tied largely to aluminum imports totaled $13.0 million, and marketing as a percentage of beer net sales is expected to rise above 10% in the second and third quarters to support major sports activations.
Wine and Spirits Remain a Drag
The Wine and Spirits segment shows why Constellation’s alcohol exposure is still uneven. Segment net sales fell 47% year over year to $149.2 million in the first quarter, mainly because $142 million of sales from the 2025 Wine Divestitures were no longer in the business.
The organic view was better, with wine and spirits organic net sales up 8%, organic shipments up 7.7% and depletions up 6.6%. Still, the segment reported a comparable operating loss of $1.1 million, and fiscal 2027 organic net sales are expected to range from down 1% to up 1%. Diageo plc DEO, with its large spirits, beer and wine portfolio, remains a relevant peer for investors tracking premiumization and pressure across global beverage alcohol.
Cash Flow and Capital Returns Add Support
Constellation Brands continues to generate cash while funding brand investment, brewery projects and capital returns. Net cash provided by operating activities was $661.8 million in the first quarter, compared with $637.2 million in the prior-year period.
The company repurchased 1.5 million Class A shares for $223.8 million during the quarter and another 714,387 shares for $100 million after quarter end. As of June 26, 2026, $2.75 billion remained available for future repurchases. The board also declared a quarterly dividend of $1.03 per Class A share.
What Should Investors do With STZ Now?
The bottom line is that STZ is tracking the right alcohol themes in premium beer, non-alcohol offerings and portfolio reshaping, but the near-term setup is constrained by soft consumer demand and margin pressure. Fiscal 2027 guidance still calls for enterprise organic net sales growth in a range of down 1% to up 1%, underscoring limited visibility.
Image Source: Zacks Investment Research
STZ currently carries a Zacks Rank #4 (Sell). That rank signals pressure from earnings estimate trends, so investors may want to be selective despite the company’s brand strength and cash generation.
The stock has a Value Score of B, Growth Score of C, Momentum Score of B and VGM Score of B. The B grades show favorable value and momentum characteristics, but Style Scores are designed to complement the Zacks Rank, not override it. For now, STZ looks like a stock with solid assets but a cautious earnings setup.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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STZ Stock Tracks Key Alcohol Trends in Demand and Margins

Players in the Zacks Beverages – Alcohol industry are navigating a period of structural change as evolving consumer preferences and cost pressures reshape the competitive landscape. Moderation trends, particularly among younger and health-conscious consumers, are weighing on long-term demand for traditional beer, wine and spirits, creating concerns over sustainable volume growth. At the same time, tariffs and elevated costs for packaging, freight, labor and agricultural inputs are pressuring margins, especially for companies with global supply chains and limited pricing power.
However, the industry also offers meaningful growth opportunities through innovation. Expanding demand for ready-to-drink cocktails, and low and no-alcohol beverages is creating revenue streams, while companies that diversify their portfolios and adapt to changing consumption habits are better positioned to offset volume headwinds. For investors, success will likely depend on companies' ability to balance pricing power, cost discipline and product innovation while capitalizing on evolving consumer preferences. Leading players, including Anheuser-Busch InBev BUD, Diageo Plc DEO, Constellation Brands Inc. STZ, Brown-Forman Corporation BF.B and Molson Coors Beverage Company TAP, look well-placed to capitalize on these trends.
About the Industry
The Zacks Beverages – Alcohol industry mainly comprises producers, importers, exporters, marketers and sellers of alcoholic beverages like beer, craft beer, ciders, wine, rum, whiskey, liqueurs, vodka, tequila, champagnes, brandy, amaretto, ready-to-drink (RTD) cocktails and malt. Some industry players also produce and sell non-alcoholic beverages like carbonated soft drinks, sparkling waters, bottled water, energy drinks, powdered and natural juices, and RTD teas. The companies sell products through wholesalers and retailers like supermarkets, warehouse clubs, grocery stores, convenience stores, package stores, drug stores and other retail outlets. The industry participants also sell beer directly to consumers in cans and bottles at restaurants, pubs, bars and liquor stores. Some brewers operate brewpubs or tasting rooms at breweries, offering consumers the freshest beer.
What's Shaping the Future of Beverages - Alcohol Industry
Moderation Trend Pressure Alcohol Consumption: Moderation is becoming a structural headwind for alcohol companies. Younger consumers, particularly Gen Z, are drinking less, and health-conscious buyers across age groups increasingly favor balanced lifestyles. Consumers are shifting occasions away from traditional alcohol, and low or no-alcohol alternatives are gaining share. For investors, this raises concern over long-term volume growth across beer, wine and spirits. Even if pricing supports revenues, weaker consumption can limit operating leverage and make growth more dependent on innovation. Companies with high exposure to legacy alcohol categories may face slower depletion trends, higher promotional needs and weaker earnings visibility if moderation continues to reshape drinking behavior.
Tariffs Could Squeeze Margins: Tariffs are emerging as a meaningful overhang for U.S. beverage alcohol companies with global sourcing and international supply chains. Higher duties on imported glass bottles, aluminum, packaging materials and select beverage imports can raise input costs, forcing producers to either absorb the increase or pass it on to consumers. While premium brands have greater pricing flexibility, mass-market labels remain more vulnerable to demand erosion from higher shelf prices. Investors should watch for margin pressure, procurement disruptions and slower earnings growth, particularly among companies with significant import exposure or limited domestic sourcing capabilities.
Beyond tariffs, alcohol producers continue to navigate elevated costs across packaging, freight, labor and agricultural inputs. Although inflation has moderated from peak levels, cost volatility remains a key earnings risk, especially if companies are unable to fully offset higher expenses through pricing. Promotional activity may also increase as consumers become more value-conscious, pressuring the gross margin.
Innovation Beyond Traditional Alcohol Creates Growth Runway: Despite softer industry volumes, beverage companies are unlocking growth opportunities through innovation. Demand for ready-to-drink cocktails continues to outpace most traditional alcohol categories as consumers seek convenience, flavor variety and affordability. At the same time, low and no-alcohol beverages are evolving into a meaningful profit pool rather than a niche offering, attracting consumers who want moderation without abandoning social drinking. Leading brewers and spirits companies are expanding product portfolios to address these changing occasions, allowing them to capture incremental demand instead of relying solely on traditional alcohol consumption. Successful innovation could offset category pressures and strengthen long-term market positioning.
Zacks Industry Rank Indicates Dull Prospects
The Zacks Beverages – Alcohol industry is a 17-stock group within the broader Zacks Consumer Staples sector. The industry currently carries a Zacks Industry Rank #189, placing it at the bottom 23% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates dull near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the bottom 50% of the Zacks-ranked industries is a result of a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually losing confidence in this group’s earnings growth potential.
Before we present a few stocks that you may want to consider for your portfolio, let us take a look at the industry’s recent stock-market performance and valuation picture.
Industry Underperforms S&P 500
The Zacks Beverages – Alcohol industry has outperformed the broader sector and underperformed the S&P 500 in the past year.
The stocks in the industry have collectively returned 4.1% in the past year, whereas the Zacks Consumer Staples sector has risen 1.6%. Meanwhile, the Zacks S&P 500 composite has rallied 23.9%.
1-Year Price Performance
Beverages - Alcohol Industry's Valuation
Based on the forward 12-month price-to-earnings (P/E) ratio, commonly used to value Consumer Staples stocks, the industry is currently trading at 15.27X compared with the S&P 500’s 21.07X and the sector’s 17.26X.
Over the last five years, the industry traded as high as 24.1X, as low as 13.77X and at the median of 18.39X, as the chart below shows.
Price-to-Earnings Ratio (Past 5 Years)
5 Alcohol Beverages Stocks to Keep a Close Eye on
None of the stocks in the Zacks Beverages – Alcohol space currently sports a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy). However, we have selected five stocks with a Zacks Rank #3 (Hold) to watch from the same industry. You can see the complete list of today’s Zacks #1 Rank stocks here.
Let us have a look at the companies.
Anheuser-Busch InBev: Also known as AB InBev, this is a global brewing leader with a portfolio of iconic brands spanning diverse geographies. Its leading positions across key markets and expansive global footprint provide meaningful scale advantages, enabling efficient operations and the ability to grow multi-country brands worldwide. The company continues to benefit from resilient consumer demand for its core brands, supported by strong business momentum, driven by disciplined execution, sustained brand investment and an accelerated digital transformation agenda. Premiumization remains a central growth lever, as consumers increasingly trade up within the beer category.
Beyond core beer, AB InBev is steadily expanding its Beyond Beer portfolio, encompassing ready-to-drink offerings, such as canned wines and cocktails, along with hard seltzers, ciders and flavored malt beverages. This diversification strategy is enhancing relevance across occasions and consumer segments, while providing an incremental growth runway and supporting top-line momentum. The Zacks Consensus Estimate for AB InBev’s 2026 sales and earnings suggests growth of 8.4% and 15.8% from the year-ago period’s reported figures. The consensus mark for the company’s 2026 earnings has moved down by a penny in the past seven days. The Zacks Rank #3 stock has gained 15.8% in the past year.
Price & Consensus: BUD
Diageo: The stock of this London-based leading beverage company has declined 22.4% in the past year. DEO operates in approximately 180 countries, and is involved in producing, distilling, brewing, bottling, packaging and distributing spirits, wine and beer. The company continues to place innovation and consumer moderation at the center of its long-term growth strategy, addressing evolving consumption patterns and diversifying its portfolio. Innovation remains a key driver, with strong momentum across tequila, whisky, beer and RTD formats.
Equally important is Diageo’s push into moderation, wherein it has established clear leadership in non-alcoholic spirits. The company is refining its $2-billion productivity program to drive efficiency across the business while ensuring long-term sustainable growth. A key focus is balancing cost savings with strategic reinvestment, particularly in marketing and brand activation. The Zacks Consensus Estimate for Diageo’s fiscal 2027 EPS has edged down 0.3% in the past 30 days. The consensus estimate for fiscal 2027 sales and earnings suggests declines of 1.4% and 1.8%, respectively, from the year-ago period’s reported figures. The company currently has a Zacks Rank #3.
Price & Consensus: DEO
Constellation Brands: The Victor, NY-based third-largest beer company and a leading, high-end wine company in the United States continues to benefit from a sharp focus on brand building and a steady cadence of innovation. The company’s premiumization strategy remains a key growth driver, led by the sustained strength of the Modelo and Corona brand families and continued traction across its Power Brands portfolio. Its beer business is benefiting from premium and above-premium trends, supported by growth in traditional beer and adjacent categories, such as flavored beer, seltzers, RTD spirits and flavored malt beverages.
STZ is actively investing to extend the momentum of its Power Brands, aligning innovation with evolving consumer preferences and delivering successful product launches. Meanwhile, the company’s digital momentum continues to build through platforms, such as Instacart, Drizly and retailer-owned channels, reflecting consumers’ growing preference for convenience-driven purchasing. The Zacks Consensus Estimate for STZ’s fiscal 2027 earnings per share has moved down 0.2% in the past seven days. The consensus estimate for fiscal 2027 earnings suggests a decline of 0.2% from the year-ago period’s reported figure. The Zacks Rank #3 stock has lost 23.4% in the past year.
Price & Consensus: STZ
Brown-Forman: Based in Louisville, KY, this is a global spirits company that manufactures, distills, bottles, imports, exports, markets and sells a broad portfolio of premium alcoholic beverages. The company’s growth strategy is anchored in premiumization, with a clear focus on high-quality, premium and super-premium spirits that support brand equity and margin resilience. The portfolio has been streamlined around core power brands such as Jack Daniel’s and Woodford Reserve, complemented by successful additions like the Jack Daniel’s and Coca-Cola RTD, and the integration of super-premium labels Gin Mare and Diplomático.
Emerging markets continue to provide a strong growth offset, driven by rising middle-class demand and momentum across the Jack Daniel’s family. Disciplined pricing, innovation, distribution evolution and tighter cost-control underpin long-term value creation despite near-term pressures. The Zacks Consensus Estimate for BF.B’s fiscal 2027 sales and earnings suggests growth of 0.4% and 11.8%, respectively, from the year-ago period’s reported figures. The consensus mark for the Zacks Rank #3 company’s fiscal 2026 earnings has moved up 1.8% in the past 30 days. BF.B has declined 9.5% in the past year.
Price & Consensus: BF.B
Molson Coors: The stock of this Chicago, IL-based leading beverage company has declined 21.3% in the past year. TAP is on track with its revitalization plan, focused on achieving sustainable top-line growth by streamlining its organization and reinvesting resources into its brands and capabilities. Investments, partnerships and product launches, which are part of its revitalization plan, have been aiding the company.
Molson Coors has been committed to increasing its market share through innovation and premiumization. Intending to accelerate portfolio premiumization, TAP has been aggressively growing its above-premium portfolio in the past few years. The Zacks Consensus Estimate for Molson Coors’ 2026 EPS has been unchanged in the past 30 days. The consensus estimate for the Zacks Rank #3 company’s 2026 sales and earnings suggests declines of 0.1% and 11.4%, respectively, from the year-ago period’s reported figures.
Price & Consensus: TAP
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5 Alcohol Stocks to Watch Amid Changing Consumer Preferences

Diageo plc DEO is navigating a difficult industry backdrop as weak consumer confidence, pressure on disposable income and macroeconomic uncertainty weigh on spirit demand. In the first half of fiscal 2026, the company’s organic net sales declined 2.8%, hurt by softness in North America and continued weakness in Chinese white spirits.
U.S. Spirits remained under pressure as consumers traded down to more affordable alternatives, while the tequila category faced softer demand and greater competition. Tariff costs and adverse mix also pressured profitability, prompting Diageo to lower its fiscal 2026 organic sales outlook to a decline of 2-3%.
Against this challenging backdrop, innovation is emerging as a key lever for Diageo to defend market share and improve consumer engagement. The company is expanding its brand and pack offerings at more accessible price points, while launching flavors and formats to attract legal purchasing-age consumers.
Crown Royal Blackberry and Crown Royal Chocolate supported the company’s performance in the United States, while Johnnie Walker Black Ruby gained traction across the Asia Pacific, Latin America, Global Travel, Türkiye, Japan and Korea. In Great Britain, Baileys Terry’s Chocolate Orange became one of the strongest limited-time launches for the brand.
Diageo is also benefiting from growth in faster-moving categories. Its spirits ready-to-drink (RTD) portfolio delivered organic net sales growth of 17%, led by Smirnoff RTDs, while Guinness delivered 10.9% organic net sales growth. The non-alcoholic portfolio also rose about 14%, supported by Guinness 0.0, Tanqueray 0.0 and Captain Morgan 0.0. While headwinds remain, innovation should help Diageo stay competitive and support recovery.
Diageo’s Zacks Rank & Share Price Performance
Shares of this Zacks Rank #3 (Hold) company have lost 4.2% in the year-to-date period, underperforming the industry’s rally of 17.7% and the broader Consumer Staples sector’s growth of 8.2%. The stock also lagged the S&P 500’s 7.4% growth in the same period.
DEO Stock's YTD Performance
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Is DEO a Value Play Stock?
Diageo currently trades at a forward 12-month P/E ratio of 12.82X, below the industry average of 15.74X and the S&P 500’s average of 20.95X. This valuation positions the stock at a discount relative to its direct peers and the broader market.
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Better-Ranked Stocks to Consider
Fomento Economico Mexicano FMX is a leading multinational consumer company with operations spanning proximity retail, fuel, health, digital financial services, logistics and distribution, while also holding a controlling stake in Coca-Cola FEMSA, the world's largest Coca-Cola franchise bottler. The company presently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
FMX delivered a trailing four-quarter negative earnings surprise of 17%, on average. The Zacks Consensus Estimate for FMX’s current financial-year sales and EPS indicates growth of 17.5% and 115.3%, respectively, from the year-ago reported numbers.
The Vita Coco Company Inc. COCO is a leading beverage company that develops, markets and distributes coconut water and other plant-based hydration products under brands such as Vita Coco, Farmers Organic and PWR LIFT across retail, e-commerce and foodservice channels worldwide. It currently sports a Zacks Rank #1.
Vita Coco delivered a trailing four-quarter earnings surprise of 11.7%, on average. The Zacks Consensus Estimate for COCO’s current financial-year sales and EPS indicates growth of 21.4% and 47.9%, respectively, from the year-ago reported numbers.
The Coca-Cola Company KO is a global beverage giant. It presently carries a Zacks Rank #2 (Buy).
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Can Innovation Efforts Help Diageo Outpace Industry Headwinds?

Brown-Forman Corporation BF.B enters fiscal 2027 with a cautious setup. Premium spirits, emerging-market demand and innovation continue to support the portfolio, while weak developed-market consumption limits the recovery.
Brown-Forman’s fiscal 2026 net sales declined 1% on a reported basis to $3.9 billion and were flat organically. Fourth-quarter net sales rose 2% to $912 million and increased 2% organically, but earnings per share fell 62% year over year to 12 cents.
The geographic split explains the flat outlook. Emerging markets increased 14% on a reported basis and 12% organically in fiscal 2026, driven by the Jack Daniel’s family of brands in Türkiye, the United Arab Emirates and Brazil, along with double-digit growth for New Mix in Mexico. Travel Retail net sales rose 6% on a reported basis and 5% organically, helped by higher volumes of Jack Daniel’s Tennessee Whiskey. These gains show demand resilience. New Mix is benefiting from consumer interest in flavor, convenience and value in Mexico, while Brazil is supporting the Jack Daniel’s portfolio through broader distribution and revenue-growth management.
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Developed markets remain weak. In the United States, reported net sales declined 7% in fiscal 2026 and were flat organically. The decline reflected the end of the Korbel relationship, the absence of the Sonoma-Cutrer prior-year transition services agreement, lower volumes of Jack Daniel’s Tennessee Whiskey and unfavorable portfolio mix.
Developed International net sales were flat on a reported basis but declined 3% organically. The shortfall was tied to the absence of American-made beverage alcohol from retail shelves in most Canadian provinces, plus declines in Germany and the United Kingdom. Canada declined nearly 60% in fiscal 2026, and management continues to assume American spirits will remain off shelves across most of Canada in fiscal 2027.
Innovation is helping, but it does not remove earnings risk. Jack Daniel’s Tennessee Blackberry reached almost 300,000 nine-liter depletions in the United States by fiscal year-end and almost 150,000 nine-liter depletions across six European launch markets. New Mix net sales increased 41% on a reported basis and 33% organically, reflecting share gains in Mexico and its launch in the United States.
The premiumization strategy also remains relevant. Whiskey products’ net sales increased 3% on a reported basis and 1% organically in fiscal 2026, supported by Jack Daniel’s Tennessee Blackberry, favorable foreign exchange and Woodford Reserve growth in the United States. Diageo plc DEO is a relevant peer for investors watching premium spirits demand, as global beverage-alcohol portfolios face similar shifts in consumer spending. Constellation Brands, Inc. STZ, a beer, wine and spirits company, offers another comparison point for investors assessing category balance.
Still, fiscal 2027 points to limited near-term upside. Brown-Forman expects organic net sales to be approximately flat and organic operating income to decline 3-5%. The operating-income outlook reflects higher input costs, product-mix pressure from faster ready-to-drink growth and the cost cycle tied to barreled whiskey inventory. Used-barrel sales also remain a drag after non-branded and bulk net sales declined 68% in fiscal 2026.
Brown-Forman Corporation Price, Consensus and EPS Surprise
Brown-Forman Corporation price-consensus-eps-surprise-chart | Brown-Forman Corporation Quote
Financial flexibility provides a counterweight. Brown-Forman generated $1 billion in cash flows from operations in fiscal 2026, up from $598 million in the prior year. Free cash flow increased $462 million to $893 million, and the company returned $827 million to stockholders through regular dividends and share repurchases.
The bottom line is that BF.B’s flat sales outlook looks defensible, but not especially dynamic. Emerging markets, Travel Retail, innovation and premium brands are helping stabilize the business, while developed-market demand, Canada disruption, used-barrel weakness and cost inflation keep earnings visibility constrained.
The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
It has a VGM Score of C, Value Score of C, Growth Score of C and Momentum Score of B. The Rank points to a neutral near-term earnings-revision profile, while the Style Scores suggest mixed factor support, with momentum stronger than value or growth.
For investors, that combination supports a watchful stance rather than a forceful bullish view. BF.B has durable brand equity and stronger cash flow, but fiscal 2027 still depends on whether emerging-market momentum and innovation can offset macro strain in developed markets.
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