Constellation Brands heads into its June 26 earnings report with options traders showing their most defensive posture in months, even as short sellers stay firmly on the sidelines.
The clearest pre-earnings signal is in options. The put/call ratio jumped to 0.94 on Monday — more than three standard deviations above its 20-day average of 0.82 — the most elevated defensive reading relative to recent norms in the past year. That spike came as the stock lost 4.5% on the week to close at $141.51, extending a 5.3% slide over the past month. The move lower has been grinding rather than acute, but it has clearly prompted options buyers to reach for downside protection ahead of the print.
Short interest tells a less alarming story. Bears hold roughly 4.5% of the free float short — up about 14% over the past month in share terms, but still a relatively contained level. Borrow is nearly frictionless, with availability running at over 2,400% — meaning shares available to borrow dwarf the shares already lent out, so there is no squeeze pressure building in the lending market. Cost to borrow is just 0.36%, down 14% on the week. Taken together, the borrow market suggests the recent SI build reflects cautious hedging rather than a concentrated bear thesis.
The bull-bear debate centres on whether Constellation's Mexican beer franchise can re-accelerate into a softening consumer backdrop. Bulls point to market-share momentum in the premium import category and scope for positive revisions, with UBS maintaining a Buy and a $175 target — trimmed from $186 just last week — and TD Cowen upgrading to Buy in April with a $190 target. Bears, anchored by BofA's Underperform with a $152 target, flag that most of STZ's revenue depends on Mexican beer imports, leaving the company exposed to sentiment shifts around Hispanic consumer spending and any tariff-related cost pressure. The consensus mean target of $176 implies meaningful upside from current levels, but EPS momentum ranks in just the 27th percentile over 30 days, and the forward earnings trajectory has been revised lower. Valuation offers some support — the stock trades at roughly 11.7x trailing earnings — but the price-to-book multiple has compressed nearly 0.18 points over the past month as the stock has drifted.
Recent earnings history adds an interesting backdrop: the last reported print in early April produced a one-day gain of more than 10% and a five-day follow-through of over 9%. That reaction reflected a stock that had been deeply sold before the report; entering Friday's print, STZ is already down sharply from its highs, and options positioning is much more defensive than it was then. The June 26 report will test whether the beer category trends and margin guidance are enough to close the gap between the current price and a Street consensus that still sits more than 24% above it.
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