Constellation Brands (STZ) reports third-quarter earnings Wednesday after the bell, and here's the paradox investors are wrestling with: The company has been getting hammered by tariffs and a tough consumer environment, yet analysts still expect it to beat estimates. Again.

The beer and wine company behind Corona, Modelo, and Pacifico has beaten earnings expectations in nine of the last ten quarters. So even though things look rough on the surface, there's a case that much of the bad news is already priced in. Let's break down what Wall Street expects and what actually matters in this report.

The Numbers: Beats Expected Despite Decline

Analysts are forecasting third-quarter revenue of $2.16 billion, down from $2.46 billion in the same period last year. For earnings per share, the consensus sits at $2.64, compared to $3.25 a year ago. Those year-over-year declines look ugly, but context matters.

The company sold off certain wine brands in 2025, which explains part of the revenue drop. Strip that out, and organic revenue is expected to decline just 3.3% year over year, according to Needham analyst Gerald Pascarelli.

Constellation has a solid track record here. It's beaten revenue estimates in seven of the last ten quarters and crushed earnings expectations in nine out of ten. The company delivered a double-beat in the second quarter, though it stumbled on both metrics in Q1.

What Analysts Are Saying

Pascarelli, who maintains a Buy rating with a $180 price target, calls expectations "pretty muted" for the quarter. He's modeling a 5% decline in depletions and a 3.5% year-over-year drop in beer shipments, which could translate to beer revenue falling 2% compared to last year.

The analyst thinks there might actually be too much optimism baked into third-quarter beer segment estimates. But here's the silver lining: "We do not expect a notable change in tone from management and do not view much risk to current guidance and expect STZ to reiterate its current outlook."

The problem isn't going away overnight. "The Hispanic consumer remains challenged, and there is nothing to suggest that an updated iteration of the company's omnibus study will point to a marked change in sentiment," Pascarelli noted.

Still, he sees reasons for optimism beyond the third quarter. Fourth-quarter volume comparisons should be "the easiest of the year," and the 2026 World Cup looms as a potential catalyst. Forward comparables look favorable, creating what Pascarelli views as an attractive risk/reward setup over the next year.

The analyst believes the company has been hurt by factors "outside their control," including macroeconomic headwinds and pressure on Hispanic consumers. His conclusion? "We believe much of this 'moment in time' bad news is already embedded in the shares."

Other Wall Street firms have mixed views. Wells Fargo maintained an Overweight rating and raised its price target from $155 to $160. Jefferies took a more cautious stance, downgrading from Buy to Hold and cutting its target from $170 to $154.

The Key Things to Watch

While the second quarter delivered beats on the headline numbers, the beer business posted a high-single-digit decline in net sales. That's concerning because beer is the core business. Constellation holds the U.S. license for importing Modelo, Corona, and Pacifico. Modelo and Corona rank among America's top five imported beer brands, so weakness here matters.

Tariffs became a major storyline in 2025, and while the intensity has died down somewhat, investors need clarity on what tariffs actually mean for costs in the third and fourth quarters. Any early guidance on fiscal year estimates would be valuable too.

Then there's the 2026 World Cup angle. With the U.S., Canada, and Mexico hosting the tournament, analysts see Constellation as a natural beneficiary. Soccer happens once every four years at this scale, and beer sales tend to spike during major sporting events. Commentary on marketing plans and revenue expectations tied to the World Cup could help shape investor sentiment for the next fiscal year.

The Berkshire Factor

Here's an interesting subplot: Berkshire Hathaway (BRK-A) (BRK-B) initiated a position in Constellation Brands in the fourth quarter of 2024, then added to it in both the first and second quarters of 2025. The conglomerate owned 13,400,000 shares as of the end of the third quarter.

Warren Buffett recently stepped down as CEO, passing the reins to Greg Abel. Constellation represents one of Berkshire's newer positions, which means Abel will likely be watching these results closely. The company probably won't comment directly on Berkshire's stake, but the investment adds another layer of interest to the story.

What It All Means

Constellation Brands stock trades at $142.90, up 0.3% on Tuesday. That's well off the 52-week high of $226.22 and near the low end of the $126.45 to $226.22 range. Shares are down 35.9% over the past year, which explains why some analysts think the worst-case scenarios are already reflected in the price.

The setup for Wednesday's report is straightforward: Expect another beat, but pay attention to management's tone on tariffs, the Hispanic consumer, and what comes next. The third quarter might be rough, but the real story is whether conditions are stabilizing for a rebound in 2026. The World Cup could provide a narrative boost even if the underlying business takes time to recover.

With Pascarelli's assessment that headwinds have been "outside their control" and most of the bad news is "already embedded in the shares," the question isn't whether Q3 will be weak. It's whether investors can see a path forward. Wednesday's report should start to answer that.