Diageo appears to be a mature defensive business with strong brand equity, but the current figures do not provide grounds for an aggressive increase in valuation. Liquidity is acceptable: the current ratio of 1.60 is above the industry median, while the quick ratio of 0.71 is only slightly below it, which indicates a normal ability to cover short-term liabilities. At the same time, leverage is notable: debt/equity of 1.53 is significantly above the industry median, and long-term debt has increased over recent periods, which raises the valuation’s sensitivity to financing costs. Shareholders’ equity and assets are growing, which supports balance sheet resilience, but this growth is occurring on the back of a high debt base. Profitability is not confirmed by the available data: ROE, ROA, and ROI are all zero, as are net income, operating income, EBITDA, and related margin metrics, so these measures do not show any visible contribution to a re-rating. For an investor, this means that the current data set does not provide evidence of strong operating momentum that would usually justify a higher multiple. The dividend yield of around 1% looks more moderate than high and does not fully offset the weakness in earnings and capital efficiency. The absence of TTM values for P/E, P/S, P/B, and P/FCF limits a precise multiple-based valuation, so the conclusion should remain conservative. In this configuration, the balance sheet and the scale of the business support the investment case, but weak profitability and elevated debt constrain the potential upside in fair value. For a conservative investor, this is more a story of stability and defense than of strong upside. Therefore, it is appropriate to slightly lower the target benchmark, reflecting weak operating returns and debt risk despite acceptable liquidity.

Diageo plc

Diageo has a strong balance sheet and acceptable liquidity, but high leverage and the absence of visible profit/profitability limit revaluation potential.

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
Image Source: Zacks Investment Research
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.
Image Source: Zacks Investment Research
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).
The Zacks Consensus Estimate for Coca-Cola’s current financial-year sales and EPS implies growth of 3% and 8.7%, respectively, from the year-ago reported numbers. KO delivered a trailing four-quarter earnings surprise of 4.5%, on average.
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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.
Image Source: Zacks Investment Research
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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BF.B Faces Flat Sales as Emerging Markets Offset Macro Strain Ahead

Brown-Forman Corporation BF.B presents investors with a mixed setup. The company has premium brands, improving cash flow and growth pockets in emerging markets and Travel Retail. With fiscal 2027 expected to bring flat organic net sales and lower organic operating income, the case looks balanced.
BF.B’s Valuation Leaves Limited Room for Error
At $27.80 as of June 24, 2026, BF.B carried a six-12 month price target of $29. The stock trades at 18.2X trailing earnings and 16.3X the current fiscal year earnings estimate, with a price-to-sales ratio of 3.3 and a PEG ratio of 2.6.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for fiscal 2027 earnings is $1.71 per share, up from fiscal 2026 earnings of $1.53. Fiscal 2027 sales are estimated at $3.94 billion compared with $3.93 billion in fiscal 2026. That modest sales lift contrasts with the expected 3-5% decline in organic operating income.
Estimate trends are not clearly negative. The current fiscal year EPS estimate has moved 0.9% higher over the past four weeks, but the Earnings ESP of -0.3% and last EPS surprise of -63.6% keep the signal mixed.
Image Source: Zacks Investment Research
Premium Brands Still Support the Long-Term Case
Brown-Forman’s appeal remains rooted in premiumization, whiskey strength and innovation. Its portfolio includes Jack Daniel’s, Woodford Reserve, Old Forester, Diplomático and Gin Mare, with Jack Daniel’s anchoring its global whiskey presence.
Innovation is giving the business some lift. 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. Whiskey products’ net sales increased 3% on a reported basis and 1% organically in fiscal 2026.
New Mix also stands out. Its net sales increased 41% on a reported basis and 33% organically, helped by share gains in Mexico and its launch in the United States. Diageo plc DEO offers spirits-market context through its global premium drinks portfolio. Constellation Brands, Inc. STZ offers a cross-category comparison because it operates across beer, wine and spirits.
Developed-Market Weakness Caps the Upside
The counterweight is demand pressure in developed markets. In fiscal 2026, U.S. net sales declined 7% on a reported basis and were flat organically, hurt by lower Jack Daniel’s Tennessee Whiskey volumes and unfavorable portfolio mix.
Developed International net sales were flat on a reported basis but fell 3% organically. The decline reflected the absence of American-made beverage alcohol from retail shelves in most Canadian provinces, along with declines in Germany and the United Kingdom. Canada fell nearly 60% in fiscal 2026.
Category softness adds caution. Tequila portfolio net sales declined 4% on a reported basis and 6% organically in fiscal 2026, while non-branded and bulk net sales fell 68% because of lower used-barrel sales.
Bottom Line on BF.B Stock
BF.B looks like a Hold because brand strength and cash generation are being offset by weak earnings momentum and a cautious fiscal 2027 outlook. Cash flow from operations rose to $1 billion in fiscal 2026, and free cash flow increased to $893 million.
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.
Its Zacks Style Scores are mixed, with a Value Score of C, Growth Score of C, Momentum Score of B and VGM Score of C. The Momentum Score is the better part of the setup, while the broader C scores point to a neutral profile.
For now, BF.B’s strengths appear real, but the earnings signals do not fully support a stronger stance. Investors may want to see steadier developed-market demand and clearer margin recovery before turning more constructive.
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Is BF.B Stock a Hold as Valuation and Earnings Signals Diverge Today?

Brown-Forman Corporation BF.B enters fiscal 2027 with a familiar mix of premium brand strength and uneven consumer demand. The stock’s outlook rests on whether innovation, emerging markets and better route-to-consumer execution can offset soft trends in developed markets.
The company still has valuable levers. Jack Daniel’s, Woodford Reserve, Old Forester, New Mix, Diplomático and Gin Mare give Brown-Forman exposure to premium spirits, American whiskey and ready-to-drink products. Near-term visibility, however, remains limited.
Fiscal 2026 showed the tension clearly. Reported net sales decreased 1% to $3.9 billion, while organic net sales were flat. Reported operating income declined 10% to $1.0 billion and organic operating income slipped 2%. Earnings per share fell 17% to $1.53.
The fourth quarter offered some sales relief but did not reset the broader story. Net sales increased 2% to $912 million, including 2% organic growth, while reported operating income dropped 53% to $96 million. Profit pressure remains a central concern.
Image Source: Zacks Investment Research
The premiumization case remains the main reason to stay engaged with the name. Whiskey net sales increased 3% on a reported basis and 1% organically in fiscal 2026, helped by the launch of Jack Daniel’s Tennessee Blackberry, foreign exchange and Woodford Reserve growth in the United States. These gains were partly offset by declines in Jack Daniel’s Tennessee Whiskey.
Innovation gave the portfolio an important lift. 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 also stood out, with net sales up 41% on a reported basis and 33% organically, fueled by market share gains in Mexico and its U.S. launch.
Geography is another support point. Emerging market net sales increased 14% on a reported basis and 12% organically in fiscal 2026, led by growth across the Jack Daniel’s family of brands in Türkiye, the United Arab Emirates and Brazil, plus strong double-digit growth of New Mix in Mexico. Travel Retail net sales rose 6% on a reported basis and 5% organically.
Brown-Forman is also reshaping how it reaches consumers. Owned distribution in Italy supported fiscal 2026 organic sales growth, while Japan is being used to deepen premium spirits execution. In the United States, the company named 11 new distributors across 25 markets to improve execution, investment support and margin structure.
The bear case is still meaningful. U.S. net sales declined 7% on a reported basis in fiscal 2026 and were flat organically. Developed International net sales were flat on a reported basis but declined 3% organically, hurt by the absence of American-made beverage alcohol from retail shelves in most Canadian provinces and declines in Germany and the United Kingdom.
Brown-Forman Price and Consensus
Category trends also remain uneven. The tequila portfolio declined 4% on a reported basis and 6% organically. Herradura fell 9% reported and 10% organically, while el Jimador declined 2% on both measures. Jack Daniel’s ready-to-drink and ready-to-pour portfolio fell 3% on a reported basis and 5% organically.
Fiscal 2027 guidance keeps the risk debate alive. Management expects organic net sales to be approximately flat and organic operating income to decline 3-5%. That outlook suggests benefits from restructuring, distributor changes and innovation may be absorbed by macro pressure, geopolitical instability and weak consumption in developed markets.
Investors tracking beverage alcohol stocks may also compare Brown-Forman with Diageo plc DEO, where brand execution and spirits demand are key considerations. Constellation Brands STZ offers another reference point for evaluating consumer spending, category mix and pricing power across alcohol names.
Bottom line, Brown-Forman has credible long-term assets, but fiscal 2027 looks more like a rebuilding year than a clean rebound. Premium whiskey, ready-to-drink growth and emerging markets support the outlook, while developed-market softness, tequila weakness and lower operating income guidance temper enthusiasm.
BF.B currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The stock has a VGM Score of C, a Value Score of C, a Growth Score of C and a Momentum Score of B. The rank points to a balanced near-term earnings outlook, while the Style Scores suggest average value and growth characteristics, with relatively better momentum. For now, that combination supports a measured view rather than an aggressive stance.
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From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
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Brown-Forman Stock Outlook Hinges on Premium Growth and FY27 Risks

Key Points
Diageo's 4.2% yield is well-covered by free cash flow despite a tough year for premium spirits.
Walmart's free cash flow covers its dividend twice over, leaving room for decades of future increases.
PepsiCo makes most of its money from Frito-Lay snacks, not beverages.
The S&P 500 (SNPINDEX: ^GSPC) has delivered solid gains over the past year, but not every blue chip stock has participated in the rally. Many dividend-paying consumer giants are trading 30% or more below their 52-week highs, setting up smart entry points for income-focused investors.
Three stocks stand out as compelling opportunities right now. You probably interacted with at least one of these companies before breakfast this morning. Maybe you brushed your teeth after a glass of Tropicana orange juice, or grabbed a bag of Doritos for the road, or swung by Walmart for coffee creamer.
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These brands are so embedded in our daily lives that it's easy to forget they're publicly traded companies with stock prices that actually move -- and wealth-building dividend policies.
As of June 22, spirits titan Diageo (NYSE: DEO), snack-and-beverage leader PepsiCo (NASDAQ: PEP), and retail behemoth Walmart (NASDAQ: WMT) are all trading between 13% and 32% below their 52-week highs.
Each company owns a portfolio of brands that have generated cash for decades, and each continues to reward shareholders with growing dividend payments. With all three trading at significant discounts to recent highs, long-term investors have a chance to lock in above-average yields on some of the most durable businesses in the consumer sector.
Diageo: Premium spirits at a discount
If you've ever ordered a Johnnie Walker at an airport bar, toasted with Don Julio at a wedding, or grabbed a Guinness on St. Patrick's Day, you've contributed to Diageo's bottom line. The British spirits giant owns more than 200 brands spanning whiskey, tequila, vodka, gin, and beer. Its products sit behind practically every bar on Earth.
Consumers have been nursing their drinks lately. Net income fell 39% to $2.35 billion in fiscal year 2025, while free cash flow dropped from $4.6 billion to $2.7 billion. Wall Street noticed, and Diageo's stock has dropped 32% from last August's 52-week high.
Diageo doesn't boast the multidecade dividend growth streaks of American consumer staples giants, but the current yield is well covered by free cash flow. The falling stock price results in richer dividend yields, currently 4.2%.
At 12x forward earnings, the market is pricing in a Diageo hangover that won't last indefinitely. Diageo's 60% gross margin and business model built on aging inventory that appreciates over time (literally, in the case of premium whiskey) mean its cash generation should recover as consumer spending normalizes.
People have been raising glasses of Johnnie Walker and Guinness for generations; that's unlikely to change.
PepsiCo: The Dividend King of snacks
PepsiCo is named after a cola but makes most of its money from chips.
The Frito-Lay snack empire (Doritos, Lay's, Cheetos, Tostitos) delivers roughly 60% of the company's operating profit. The beverage side adds household names like Pepsi, Mountain Dew, Gatorade, and Tropicana. Together, these brands stock pantries and vending machines worldwide.
The stock is down 18% from its 52-week high, which seems harsh for a company that just extended its dividend growth streak to 54 consecutive years. PepsiCo is a Dividend King, a rare title reserved for companies with at least 50 years of unbroken annual payout boosts.
The business isn't exactly humming, as consumers around the world are pinching their snack-buying pennies. Still, PepsiCo keeps delivering reasonable growth even in a downturn. Revenue grew 2% last year. Free cash flow rose 7%. The 4.2% yield matches Diageo's and ranks among the highest PepsiCo has ever offered.
To be fair, the payout ratio is tight. PepsiCo sends nearly all its free cash flow to shareholders, leaving little room for more increases powered directly by cash flow. But PepsiCo has a long history of finding extra cash for its dividends in any economy. The 15.5x forward earnings suggest the market is pricing in stagnation. That skepticism looks overdone.
Walmart: Raising dividends since Nixon
Walmart is the world's largest retailer, operating more than 10,500 stores across 19 countries. The company generated $713 billion in revenue last year. That's more than the gross domestic product (GDP) of wealthy countries such as Sweden, Belgium, and Argentina. Revenue grew 5%. Net income rose 13%. Free cash flow jumped 18%. The business is firing on all cylinders, driven by a surprising amount of e-commerce and technical know-how.
The 0.9% dividend yield won't turn heads, but the growth rate might. Walmart has raised its payout for 53 consecutive years, joining PepsiCo in the exclusive Dividend Kings club. Walmart's free cash flow doubles the dividend payout budget.
The stock is down 13% from its 52-week high. For a retailer that has thrived through recessions, the rise of e-commerce, and a global pandemic, that discount looks like an opportunity. For investors willing to trade a lower starting yield for decades of reliable growth, Walmart belongs in the conversation.
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Anders Bylund has positions in Walmart. The Motley Fool has positions in and recommends Walmart. The Motley Fool recommends Diageo. 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.

3 Stocks to Buy for Decades of Passive Income While They're Down

Key Points
Diageo maintains a vast global reach with a portfolio of over 200 brands sold across nearly 180 countries.
Brown-Forman demonstrates high profitability with net margins exceeding 20% and a robust current ratio.
Which spirits giant offers the better value proposition for retail investors heading into 2026?
The spirits industry is undergoing a shift as consumer preferences evolve, leaving investors to choose between global diversification and specialized brand power. This comparison evaluates whether Diageo (NYSE:DEO) or Brown-Forman (NYSE:BFB)(NYSE:BFA) is the better buy.
Diageo operates as a global leader with an expansive reach in the premium drinks market, while Brown-Forman focuses on a concentrated portfolio of world-renowned American whiskey brands. Both companies are core holdings in many consumer defensive portfolios, offering stability through established brand loyalty and consistent cash generation.
The case for Diageo
Diageo sells a diverse range of over 200 brands, including Johnnie Walker, Smirnoff, and Guinness, to consumers in almost 180 countries. The company operates across major geographic regions like North America, Europe, Africa, and Asia Pacific. As a significant player among beverage stocks, the business relies on its massive global distribution network to reach a wide variety of customer segments.
In FY 2025, revenue reached nearly $20.2 billion, a slight decline of approximately 0.1% from the prior year. The company reported net income of roughly $2.4 billion for the period. This resulted in a net margin of close to 11.6%, a notable decrease from the 19.1% net margin achieved during the 2024 fiscal year.
According to its June 2025 balance sheet, the debt-to-equity ratio was roughly 2.2x. This indicates that total debt is 2.2 times shareholder equity. The current ratio, which measures the ability to cover short-term debts with current assets, was approximately 1.6x. Free cash flow, which is cash from operations minus capital expenditures, was nearly $2.7 billion.
The case for Brown-Forman
Brown-Forman produces and markets recognizable brands such as Jack Daniel’s, Woodford Reserve, and Herradura. It distributes these products in over 170 markets and employs roughly 5,000 people worldwide. In FY 2025, the company's two largest customers accounted for approximately 13% and 11% of consolidated net sales, respectively. Customer concentration like this adds a layer of risk to the business.
During FY 2025, total revenue was approximately $4.0 billion, a 4.9% decrease from the prior fiscal year. Despite the revenue dip, the company reported net income of roughly $869.0 million. This performance supported a net margin of about 21.9%, indicating the percentage of revenue remaining as profit after all expenses are paid.
As of its April 2025 balance sheet, the debt-to-equity ratio was approximately 0.7x. This shows that total debt is less than the company's shareholder equity. The current ratio was roughly 3.9x, suggesting a strong capacity to meet short-term financial obligations. Free cash flow for the fiscal period was nearly $431.0 million.
Risk profile comparison
Diageo faces intense competition from other global spirits producers like Pernod Ricard and LVMH. The company is also subject to strict international regulations regarding the production, marketing, and sale of alcohol. Changes in excise taxes or trade policies in major regions, such as North America or Europe, could negatively impact total sales and profitability.
Brown-Forman relies heavily on the Jack Daniel’s family of brands for its primary revenue, meaning any loss of consumer relevance would materially affect the business. The company also faces risks from trade policies and retaliatory tariffs on American whiskey, which have historically impacted international margins. Furthermore, major brands are distilled at single locations, leaving the company vulnerable to disruptions from catastrophic events at those facilities while competing with rivals like Constellation Brands.
Valuation comparison
Brown-Forman currently carries a lower Forward P/E compared to Diageo, though Diageo offers a more attractive P/S ratio based on its high total revenue.
Forward P/E
17.0x
15.2x
24.8x
P/S ratio
2.2x
3.0x
Sector benchmark uses the SPDR XLP sector ETF.
Valuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.
Which stock would I buy in 2026?
As of 2025, the number of U.S. adults who drink alcohol dipped to 54% -- the lowest score in Gallup’s 90 years of measuring the statistic. For young adults aged 18-34 and households under $40,000 annually, these figures plummet to 50% and 39%, respectively, showing that younger generations are not only less interested in drinking but might also lack the financial confidence to spend money on something that used to be largely considered a “staple” good.
Amid these struggles, Diageo and Brown-Forman’s shares have fallen by 64% and 69% over the last five years, leaving the companies to trade at once-in-a-decade low valuations. Thanks to these incredibly low valuations -- as highlighted above by their forward P/E and P/S ratios -- I think it is worth watching these two deeply discounted stocks.
However, neither stock has a clear catalyst to drive its shares higher, so I would rather wait to see some improvement in sales and profitability in upcoming earnings calls before considering a buy. That said, if results improve over the next couple of quarters, I’d be more interested in buying Diageo, as it has a bit of a strong sales tilt toward international markets, which haven’t seen drinking drop off as dramatically.
Furthermore, Diageo has a history of acquisitions, which could put it in a position of power today, as many liquor and alcohol stocks have sold off dramatically. The company could add to its portfolio of drinks at a discount and potentially restart its growth story internationally with a shrewd deal or two.
Ultimately, I’m not in a huge rush to buy either Diageo or Brown-Forman -- I really want to see some improved results first. However, I’d rather look to buy Diageo and its variable 4.2% dividend yield, as its industry-leading scale should help it thrive if and when drinking rates rebound.
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Now, it’s worth noting Stock Advisor’s total average return is 959% — a market-crushing outperformance compared to 210% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of June 4, 2026.
Josh Kohn-Lindquist has no position in any of the stocks mentioned. The Motley Fool recommends Constellation Brands, Diageo Plc, and Lvmh Moët Hennessy - Louis Vuitton, Société Européenne. 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.

Diageo vs. Brown-Forman: Which Consumer Goods Stock Is a Better Buy in 2026?

Key Points
Greg Abel and his team cut 16 positions from the total equity portfolio.
These were all small positions, including some long-time holdings like Visa and Mastercard.
The new portfolio still includes the Buffett favorites and is more concentrated in the higher-conviction positions.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
Greg Abel has been with Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB) for 26 years, since the holding company acquired MidAmerican Energy. He rose through the company's ranks and was hand-picked by Warren Buffett to take over when he retired, and that happened earlier this year.
Although he's been CEO of Berkshire Hathaway for several months, the 2026 first quarter was his first in the top position. The first-quarter 13F Securities and Exchange Commission (SEC) filing reporting the company's positions gives investors a glimpse into how Abel is managing its $330 billion equity portfolio.
Abel has put his clear imprint on the portfolio, although he hasn't departed radically from Buffett's style. There were several notable changes, including new positions in Delta Airlines and Macy's and a tripling of the position in Alphabet.
Also notable was that Abel sold out of 16 positions. There had been prior reports that he'd sold out of the positions managed by former investing manager Todd Combs, and Abel had also let shareholders know in his first annual report back in February that he would focus on a concentrated group of high-conviction stocks.
All the stocks Berkshire Hathaway sold
Abel and his team sold out of the following stocks in the first quarter:
Allegion
Amazon
Aon
Atlanta Braves Holdings
Charter Communications
Diageo
Domino's Pizza
Heico
Lamar Advertising
Liberty Latin America Series A
Liberty Latin America Series C
Liberty Formula 1
Mastercard
Pool Corp.
UnitedHealth Group
Visa
These were all smaller positions, including newer holdings like UnitedHealth and Heico as well as stocks that had been in the portfolio for years, such as Visa and Mastercard. The largest position was Visa, which had been 1.1% of the portfolio before the sell-off.
It's still Berkshire Hathaway
Not including investments in Japan, the portfolio is left with 29 positions. These include Buffett's favorite stocks: Apple, American Express, and Coca-Cola, the top three positions, plus Moody's, which Buffett has also cited as an example of an excellent company.
While the selling of positions, about a third of Berkshire's total, makes the portfolio look very different, the Buffett flavor is still strong. Abel didn't sell any of the bank stocks, which have always featured strongly in the portfolio, and he kept a large group of financial stocks, such as American Express.
Macy's and Delta both fit into the classic Buffett schema, and Delta has been in the portfolio before. The standout from the quarter is the major investment in Alphabet, but investors shouldn't be too surprised. Buffett was already a big Apple fan, so there's a precedent for investing in the right kind of tech stock.
The report confirms that Abel isn't out to change the company's equity model, and Berkshire Hathaway's sagging stock ticked higher on the news.
Should you buy stock in Berkshire Hathaway right now?
Before you buy stock in Berkshire Hathaway, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Berkshire Hathaway wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $477,813!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,320,088!*
Now, it’s worth noting Stock Advisor’s total average return is 986% — a market-crushing outperformance compared to 208% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of May 24, 2026.
American Express is an advertising partner of Motley Fool Money. Jennifer Saibil has positions in American Express and Apple. The Motley Fool has positions in and recommends Alphabet, Amazon, American Express, Apple, Atlanta Braves Holdings, Berkshire Hathaway, Domino's Pizza, Heico, Mastercard, Moody's, and Visa. The Motley Fool recommends Delta Air Lines, Diageo Plc, Pool, and UnitedHealth Group. 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.

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