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One of Warren Buffett’s investing tenets is to buy good companies at fair prices. Often those are value stocks – stocks trading below their long-term intrinsic value.

Most of the stocks in his Berkshire Hathaway portfolio were good values when he bought them and took off over time, like Apple (AAPL). Buffett bought it in 2016 when it experienced a significant dip and was trading at around 13 times earnings. It has been Berkshire’s largest holding since.

This year, Buffett has been loading up on another beaten down stock, Constellation Brands (NYSE: STZ), the beer and wine producer which makes Corona and Modelo.

Constellation reported fiscal second quarter earnings that beat analysts’ estimates on Monday, even though net sales declined 15% year-over-year and earnings fell 16%.

“In the second quarter of fiscal 2026 we continued to navigate a difficult socioeconomic environment that dampened consumer demand across the industry,” CEO Bill Newlands and CFO Garth Hankinson, said.

The stock was up about 4% at the open on Tuesday, but there are some lingering concerns about its near-term growth prospects.

Classic Buffett value play

Constellation is the classic Buffett value play. It is a market leader as the largest beer distributor and importer in the U.S. but its stock price has been plummeting due to lower demand for beer and wine, tariff costs, and other issues. It is down about 35% year-to-date and roughly 43% over the past 12 months.

Its valuation dropped sharply, trading at around 18 times earnings, down from 76 late last year. Buffett added the stock to the Berkshire portfolio in Q4 of 2024, buying about 5.6 million shares, or 3.1% of the portfolio. In Q1 he added another 6.4 million shares, doubling the stake to 6.6%, and in Q2 Buffett added 1.4 million more shares to increase the stake to 7.4%, according to Whale Wisdom.

But in September, Constellation updated its fiscal 2026 guidance, lowering its estimates for net sales, net income, earnings, free cash flow, and other metrics due to macroeconomic headwinds affecting consumer demand.

In the Q2 earnings report released Monday, Constellation maintained those reduced guidance numbers, which call for a 4% to 6% net sales decline, including a 2% to 4% drop in beer sales and a 17% to 20% loss in wine sales.

Can Constellation turn things around?

It will be interesting to see what moves Buffett made in the third quarter after Constellation lowered its guidance.

Buffett typically does not act on short-term outlooks, but perhaps there are longer-term concerns.

Several Wall Street analysts lowered their price targets for Constellation, including Morgan Stanley to $160 per share. But that’s still a 12% gain over the current $143 share price. Citi recently dropped it to $145 per share. The consensus price target is $167 per share, which would be a 17% gain.

Investors should be wary, particularly if there is a long-term trend away from beer and wine consumption. While Buffett’s track record is legendary, it’s not without mistakes. Investors should check Berkshire’s Q3 13F to see what changes, if any, were made.

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