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Brown-Forman Looks Good: Do You Hold Stock Positions?
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Brown-Forman Corp. (BF.B - Free Report) is doing well on its strong portfolio of premium American whiskey brands, along with its Jack Daniel’s trademark. The company expects to grow on the back of strong demand for its authentic American whiskey brands worldwide, consumer interest in flavored whiskey and a growing trend in premium spirits. Alongside, the company remains focused on expanding operations and the reach of its premium brands to drive growth.
Further, Brown-Forman has a solid track record of outperforming earnings estimates. With an earnings beat in fiscal fourth-quarter 2016, the company delivered an average earnings surprise of 3.7% in the trailing four quarters.
However, the company has been battling foreign currency headwinds for a while now, along with tough economic conditions in emerging markets and soft travel retail network, which is weighing on its top line. Adverse currency movements hurt the company’s top-line growth for the fiscal by 6 points.
Also, Brown-Forman indicated that future projections have become difficult in the face of an uncertain global economic environment and its effect on business. The company expects currency headwinds to persist in fiscal 2017, which is expected to bear about a 7 cent per share negative impact on its earnings per share. The Zacks Consensus Estimate also witnessed a downtrend in the last 60 days. All these factors raise concerns over the company’s future performance. Moreover, stiff competition from other players and any rise in excise taxes remain concerns.
Nonetheless, we expect Brown-Forman to gain from its portfolio of more than 25 premium brands, alongside its focus on pricing, product innovation and expanding operations in emerging markets. These traits are likely to boost its operational performance and strengthen its market position.
Add to this, the company’s consistent record of returning cash to its shareholders through regular dividend payouts and share repurchases, which demonstrate its ability to boost earnings and cash flows over the long term. The company also proposed a two-for-one stock split for Class A and B shares on May 26, marking the seventh split in the last 35 years.
Overall, we remain positive about Brown-Forman’s business and portfolio strength, along with its solid surprise history. But how far will these strengths help the company to tackle the current economic scenario is a matter of dispute.
Zacks Rank
Brown-Forman currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the beverage-alcohol industry include Compania Cervecerias Unidas S.A. (CCU - Free Report) with a Zacks Rank #1 (Strong Buy), and Constellation Brands Inc. (STZ - Free Report) and Molson Coors Brewing Company (TAP - Free Report) , each holding a Zacks Rank #2 (Buy).
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Brown-Forman Looks Good: Do You Hold Stock Positions?
Brown-Forman Corp. (BF.B - Free Report) is doing well on its strong portfolio of premium American whiskey brands, along with its Jack Daniel’s trademark. The company expects to grow on the back of strong demand for its authentic American whiskey brands worldwide, consumer interest in flavored whiskey and a growing trend in premium spirits. Alongside, the company remains focused on expanding operations and the reach of its premium brands to drive growth.
Further, Brown-Forman has a solid track record of outperforming earnings estimates. With an earnings beat in fiscal fourth-quarter 2016, the company delivered an average earnings surprise of 3.7% in the trailing four quarters.
However, the company has been battling foreign currency headwinds for a while now, along with tough economic conditions in emerging markets and soft travel retail network, which is weighing on its top line. Adverse currency movements hurt the company’s top-line growth for the fiscal by 6 points.
Also, Brown-Forman indicated that future projections have become difficult in the face of an uncertain global economic environment and its effect on business. The company expects currency headwinds to persist in fiscal 2017, which is expected to bear about a 7 cent per share negative impact on its earnings per share. The Zacks Consensus Estimate also witnessed a downtrend in the last 60 days. All these factors raise concerns over the company’s future performance. Moreover, stiff competition from other players and any rise in excise taxes remain concerns.
Nonetheless, we expect Brown-Forman to gain from its portfolio of more than 25 premium brands, alongside its focus on pricing, product innovation and expanding operations in emerging markets. These traits are likely to boost its operational performance and strengthen its market position.
Add to this, the company’s consistent record of returning cash to its shareholders through regular dividend payouts and share repurchases, which demonstrate its ability to boost earnings and cash flows over the long term. The company also proposed a two-for-one stock split for Class A and B shares on May 26, marking the seventh split in the last 35 years.
Overall, we remain positive about Brown-Forman’s business and portfolio strength, along with its solid surprise history. But how far will these strengths help the company to tackle the current economic scenario is a matter of dispute.
Zacks Rank
Brown-Forman currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the beverage-alcohol industry include Compania Cervecerias Unidas S.A. (CCU - Free Report) with a Zacks Rank #1 (Strong Buy), and Constellation Brands Inc. (STZ - Free Report) and Molson Coors Brewing Company (TAP - Free Report) , each holding a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>