Investors have become more optimistic about Constellation Brands' (STZ 0.53%) business since the stock hit its 2020 lows in mid-March. But the huge rally since then mostly reflects a prediction that the alcoholic beverage giant can better navigate through the challenges that have reduced sales for global peers like Molson Coors (TAP 0.54%) and Anheuser-Busch InBev (BUD 0.96%).

We'll get a major update on that performance picture when Constellation reports its fiscal second-quarter earnings results on Thursday, Oct. 1. Let's look at the metrics that might determine whether its stock rally will continue into late 2020 and beyond. There are three trends that could affect the upcoming report.

A man shops for beer at a supermarket.

Image source: Getty Images.

1. Growing without bars

Investors love the fact that Constellation Brands' business isn't as exposed to the shrinking restaurant and bar industry as Molson Coors and Anheuser-Busch are. Collapsing sales in that niche only pushed revenue lower by 6% overall last quarter while these rivals each posted double-digit slumps. The beverage giant's drink portfolio also isn't quite as popular for at-home consumption as Boston Beer's, which last posted a 42% sales surge thanks to the hit Truly hard seltzer franchise.

But Constellation Brands has its own popular brands including Modelo and the recently launched Corona hard seltzer offering. We'll get updates on whether these products again helped keep overall sales volumes rising, although at a weaker pace than Boston Beer, over the last few months. Investors will also learn on Thursday whether the new Corona brand continued winning market share after quickly establishing itself near the top of sales charts through the early phases of the pandemic.

2. Margin progress

The company's focus on the premium side of the market delivered strong profitability in recent years, but that pillar of the investment thesis has been shaky recently. Constellation Brands struggled with especially weak results in its wine and spirits segment despite some major divestments in fiscal 2020.

STZ Operating Margin (TTM) Chart

STZ Operating Margin (TTM) data by YCharts

Investors started to see hints of the expected payoff from that restructuring last quarter when the wine and spirits division posted a 2.4 percentage-point boost in operating margin. Yet the division still has room to expand toward management's 30% margin target over the next few quarters. The beer business, by comparison, enjoys a margin of over 40%.

3. Capital updates

Capital spending has been a major part of the Constellation Brands growth story over the past decade, with huge purchases including the Mexican beer portfolio in 2012 and growing bets on recreational marijuana through Canopy Growth.

That latest investment has been a bit of a drag on the business so far. Yet management has made it clear, through its comments and its increasing equity stake, that Canopy Growth is an attractive long-term play. Look for CEO Bill Newlands and his team to add details to that picture on Thursday with updated financial projections on the stock and the wider recreational marijuana potential.

Finally, a less volatile selling environment might convince executives to adjust their cash return plans, which by early July heavily favored debt reduction. A cataclysmic sales slump isn't as much of a concern today, even though the recession could stretch on into 2021, and so Constellation Brands might find room to ramp up stock repurchases and dividends over the next few quarters.