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Constellation Brands (NYSE: STZ), producer of alcoholic beverage brands like Corona and Modelo, released its second-quarter fiscal 2025 financial results Thursday. The results were mixed, but income-focused investors can still turn to Constellation Brands for decent value and consistent dividend payouts.

Constellation Brands is a cyclical business, to a certain extent, since alcohol isn’t considered a necessity. It’s interesting to take note of inflation’s impact on Constellation Brands’ sales as there’s been a shift from one class of alcoholic beverages to another.

I won’t necessarily claim that Constellation Brands is one of the best stocks to buy in 2024, but it should appeal to “steady Eddie” investors seeking reliable income. So, if you’re in the market for a “slow but steady wins the race” type of investment, this could fit the bill.

A cocktail of mixed results

For the second quarter of fiscal 2025, Constellation Brands generated $2.92 billion in net sales, slightly underperforming the analysts’ consensus estimate of $2.95 billion. However, there’s some good news to offset this.

In particular, Constellation Brands reported adjusted earnings of $4.32 per share in Q2 FY2025. This result beat Wall Street’s consensus forecast of $4.08 per share.

With that bottom-line result, Constellation Brands can now claim to have seven consecutive quarterly EPS beats. Constellation Brands might not be in the financial headlines every day, but STZ stock ought to appeal to investors who prioritize consistency over thrills.

For the full year of fiscal 2025, Constellation Brands reiterated its adjusted earnings guidance of $13.60 to $13.80 per share. The midpoint of that guidance range is $13.70, which is quite close to Wall Street’s consensus estimate of $13.71 per share.

Consumers choose beer over wine

Call it an excuse or just call it an observation, but Constellation Brands CEO Bill Newlands noted that the “current macroenvironment backdrop has weighed on demand for beverage alcohol”. It’s probably safe to assume that Newlands is referring to inflation when he speaks of the “current macroenvironment backdrop.”

Inflation’s knock-on effects are manifold, but here’s a ripple effect I’ll bet you didn’t anticipate. Judging by Constellation Brands’ second-quarter fiscal 2025 sales trends, it appears that cost-conscious consumers are choosing beer over wine.

During that quarter, Constellation Brands’ wine and spirit sales decreased 12% year over year, but the company’s beer sales increased by 6%. As alluded to earlier, the overall impact led to quarterly revenue that fell short of analysts’ expectations.

It will be interesting to see if this beer-over-wine trend persists in the coming quarters. The U.S. inflation rate has cooled off since 2022, so maybe Constellation Brands will soon experience a resurgence in wine sales.

A fine brew of value and yield

Instead of seeking jaw-dropping sales and income stats, Constellation Brands’ shareholders should concentrate on solid value and income opportunities. As it turns out, Constellation Brands delivers respectable numbers on these fronts.

For one thing, Constellation Brands’ forward annual dividend yield of $1.47 sweetens the deal for the company’s investors. In addition, Constellation Brands has a track record of increasing its dividend distributions (the dollar amount, not the yield percentage) slowly but surely over time.

Finally, we can use a classic valuation metric to determine whether Constellation Brands shares are reasonably priced or not. Specifically, Constellation Brands’ GAAP-measured trailing 12-month price-to-earnings (P/E) ratio of around 19x compares favorably to the sector median P/E ratio of around 22x.

At the end of the day, excitement-seeking investors won’t find a lot of fireworks with Constellation Brands. However, STZ stock deserves the consideration of anyone looking for a reliable earnings beater and dividend grower that sells plenty of beer and wine, albeit in varying quantities depending on macroeconomic conditions.

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