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Can Brown-Forman's Growth Initiatives Counter Headwinds?
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Major producer and distributor of premium alcoholic beverages, Brown-Forman Corporation (BF.B - Free Report) commands a strong portfolio of globally recognized brands. However, owing to its global operations, the company remains exposed to currency movements, which have been hurting its results for quite sometime now.
In fact, the company also expects currency headwinds to continue in fiscal 2017, which is expected to bear about 5 cents per share negative impact on its earnings for the fiscal. Given these currency woes, Brown-Forman has underperformed the Zacks categorized Consumer–Staples sector, with its shares falling 7.6% year to date, compared with the industry’s 1.3% increase.
Nonetheless, a book should not be judged by its cover. So, let’s delve deeper into Brown-Forman’s inside story and long-term prospects.
The producer of high-quality spirits like Jack Daniels, Brown-Forman has been focused on expanding operations to enhance performance. This is well evident from its efforts to expand Jack Daniel's market share in the developed markets, such as France and the U.S., and in emerging markets like Russia, Poland, and Mexico, where the whiskey category is in the early stages of development.
Further, the company is looking to enter the fastest-growing spirit category – the Irish Whiskey with the purchase of all the shares of Slane Castle Irish Whiskey Limited in Ireland. In another development, the company acquired two historic properties at West Main Street in Louisville, KY to boost its Old Forester brand. Further, as part of its portfolio management, the company concluded the sale of its Southern Comfort and Tuaca trademarks.
Moreover, we expect Brown-Forman’s continued focus on pricing, product innovation and expansion in emerging markets to boost its operational performance, and further improve its market position. The company also has a consistent record of returning cash to its shareholders through regular dividend payouts and share repurchases. This demonstrates Brown-Forman’s ability to boost earnings and cash flows over the long term, alongside underscoring its commitment toward shareholders.
Finally, let’s take a sneak peek into this Zacks Rank #3 (Hold) stock’s earnings history, which shows that it has outperformed estimates by an average of 2.8% in the trailing four quarters. In the most recently reported second-quarter fiscal 2017, the company posted in-line earnings, which also increased year over year.
Though the company anticipates the perils of currency headwinds and unstable emerging market conditions along with an uncertain global economic and geopolitical environment, it remains confident of persistent growth in underlying net sales and operating income in fiscal 2017. Brown-Forman expects to grow on the back of robust worldwide demand for its authentic American whiskey brands, consumer interest in flavored whiskey and a growing trend in premium spirits.
Dean Foods’s earnings have outperformed the Zacks Consensus Estimate by an average of 5.4% in the trailing four quarters. Moreover, its long-term EPS growth rate of 12% and positive estimate revisions over the past 60 days bode well.
Ingredion Incorporated, with a long-term EPS growth rate of 11%, has seen positive estimate revisions for 2016, over the past 60 days. The company also flaunts a solid earnings surprise history.
Lancaster Colony has posted positive earnings surprises consistently for three quarters now. Also, the company has seen its estimates move north in the past 30 days.
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Can Brown-Forman's Growth Initiatives Counter Headwinds?
Major producer and distributor of premium alcoholic beverages, Brown-Forman Corporation (BF.B - Free Report) commands a strong portfolio of globally recognized brands. However, owing to its global operations, the company remains exposed to currency movements, which have been hurting its results for quite sometime now.
In fact, the company also expects currency headwinds to continue in fiscal 2017, which is expected to bear about 5 cents per share negative impact on its earnings for the fiscal. Given these currency woes, Brown-Forman has underperformed the Zacks categorized Consumer–Staples sector, with its shares falling 7.6% year to date, compared with the industry’s 1.3% increase.
Nonetheless, a book should not be judged by its cover. So, let’s delve deeper into Brown-Forman’s inside story and long-term prospects.
The producer of high-quality spirits like Jack Daniels, Brown-Forman has been focused on expanding operations to enhance performance. This is well evident from its efforts to expand Jack Daniel's market share in the developed markets, such as France and the U.S., and in emerging markets like Russia, Poland, and Mexico, where the whiskey category is in the early stages of development.
Further, the company is looking to enter the fastest-growing spirit category – the Irish Whiskey with the purchase of all the shares of Slane Castle Irish Whiskey Limited in Ireland. In another development, the company acquired two historic properties at West Main Street in Louisville, KY to boost its Old Forester brand. Further, as part of its portfolio management, the company concluded the sale of its Southern Comfort and Tuaca trademarks.
Moreover, we expect Brown-Forman’s continued focus on pricing, product innovation and expansion in emerging markets to boost its operational performance, and further improve its market position. The company also has a consistent record of returning cash to its shareholders through regular dividend payouts and share repurchases. This demonstrates Brown-Forman’s ability to boost earnings and cash flows over the long term, alongside underscoring its commitment toward shareholders.
BROWN FORMAN B Price and Consensus
BROWN FORMAN B Price and Consensus | BROWN FORMAN B Quote
Finally, let’s take a sneak peek into this Zacks Rank #3 (Hold) stock’s earnings history, which shows that it has outperformed estimates by an average of 2.8% in the trailing four quarters. In the most recently reported second-quarter fiscal 2017, the company posted in-line earnings, which also increased year over year.
Though the company anticipates the perils of currency headwinds and unstable emerging market conditions along with an uncertain global economic and geopolitical environment, it remains confident of persistent growth in underlying net sales and operating income in fiscal 2017. Brown-Forman expects to grow on the back of robust worldwide demand for its authentic American whiskey brands, consumer interest in flavored whiskey and a growing trend in premium spirits.
Stocks to Consider
Better-ranked stocks in the broader Consumer Staples sector include Dean Foods Company , with a Zacks Rank #1 (Strong Buy), Ingredion Incorporated (INGR - Free Report) and Lancaster Colony Corporation (LANC - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Dean Foods’s earnings have outperformed the Zacks Consensus Estimate by an average of 5.4% in the trailing four quarters. Moreover, its long-term EPS growth rate of 12% and positive estimate revisions over the past 60 days bode well.
Ingredion Incorporated, with a long-term EPS growth rate of 11%, has seen positive estimate revisions for 2016, over the past 60 days. The company also flaunts a solid earnings surprise history.
Lancaster Colony has posted positive earnings surprises consistently for three quarters now. Also, the company has seen its estimates move north in the past 30 days.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>