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Brown-Forman's Growth Efforts on Track Amid Currency Woes
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Brown-Forman Corporation (BF.B - Free Report) is renowned for its solid brand portfolio, expansion endeavors and shareholder-friendly moves. These factors have been driving the company's performace even in the face of strong currency headwinds.
Brown-Forman is a major producer and distributor of premium alcoholic beverages in the world and it commands a strong portfolio of globally recognized brands. The company currently owns and produces a multitude of popular spirit brands, with Jack Daniels and Finlandia Vodka being among the most popular ones.
We expect the company’s continued focus on pricing, product innovation and expanding operations in emerging markets to boost its operational performance and strengthen its market position. With regards to expansion, the company plans to boost Jack Daniel's share in the developed markets such as France and the U.S. as well as in emerging markets like Russia, Poland, and Mexico where the whiskey category is in the early stages of development.
Further, this Zacks Rank #3 (Hold) company is looking to enter the fast-growing spirit category – 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. Also, as part of its portfolio management and prioritization of strategic brands, the company concluded the sale of its Southern Comfort and Tuaca trademarks to Sazerac.
These moves highlight Brown-Forman’s focus on achieving growth through prudent expansions. Looking at financials, we note that the company has a track 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.
While these factors have been driving Brown-Forman’s performance, the company’s significant international presence exposes it to currency movements, which have been hurting its results for quite some time. Given these currency woes, Brown-Forman has underperformed the Zacks categorized Consumer Staples sector, with its shares falling 5.1% year over year, compared with the sector’s 4.5% increase.
Though the company anticipates currency headwinds and unstable emerging market conditions, along with an uncertain global economic and geopolitical environment, it remains confident of growth in underlying net sales and operating income in fiscal 2017. Brown-Forman expects its results to improve on the back of robust worldwide demand for its authentic American whiskey brands, consumer interest in flavored whiskey and growth momentum in premium spirits.
Constellation Brands’ earnings have outperformed the Zacks Consensus Estimate by an average of 6.7% in the trailing four quarters. Moreover, its long-term earnings per share (EPS) growth rate of 19% and positive estimate revisions over the past seven days bode well.
Campbell Soup has seen positive estimate revisions for the current fiscal year over the past 30 days. The company’s VGM score of ‘B’ bodes well.
Conagra Brands, with a long-term EPS growth rate of 8%, has posted positive earnings surprises in three out of the past four quarters now. Also, the company has seen its estimates move north in the past 30 days.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>
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Brown-Forman's Growth Efforts on Track Amid Currency Woes
Brown-Forman Corporation (BF.B - Free Report) is renowned for its solid brand portfolio, expansion endeavors and shareholder-friendly moves. These factors have been driving the company's performace even in the face of strong currency headwinds.
Brown-Forman is a major producer and distributor of premium alcoholic beverages in the world and it commands a strong portfolio of globally recognized brands. The company currently owns and produces a multitude of popular spirit brands, with Jack Daniels and Finlandia Vodka being among the most popular ones.
We expect the company’s continued focus on pricing, product innovation and expanding operations in emerging markets to boost its operational performance and strengthen its market position. With regards to expansion, the company plans to boost Jack Daniel's share in the developed markets such as France and the U.S. as well as in emerging markets like Russia, Poland, and Mexico where the whiskey category is in the early stages of development.
Further, this Zacks Rank #3 (Hold) company is looking to enter the fast-growing spirit category – 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. Also, as part of its portfolio management and prioritization of strategic brands, the company concluded the sale of its Southern Comfort and Tuaca trademarks to Sazerac.
These moves highlight Brown-Forman’s focus on achieving growth through prudent expansions. Looking at financials, we note that the company has a track 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.
While these factors have been driving Brown-Forman’s performance, the company’s significant international presence exposes it to currency movements, which have been hurting its results for quite some time. Given these currency woes, Brown-Forman has underperformed the Zacks categorized Consumer Staples sector, with its shares falling 5.1% year over year, compared with the sector’s 4.5% increase.
Though the company anticipates currency headwinds and unstable emerging market conditions, along with an uncertain global economic and geopolitical environment, it remains confident of growth in underlying net sales and operating income in fiscal 2017. Brown-Forman expects its results to improve on the back of robust worldwide demand for its authentic American whiskey brands, consumer interest in flavored whiskey and growth momentum in premium spirits.
Key Picks
Better-ranked stocks in the broader Consumer Staples sector include Constellation Brands, Inc. (STZ - Free Report) , Campbell Soup Company (CPB - Free Report) and Conagra Brands, Inc. (CAG - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Constellation Brands’ earnings have outperformed the Zacks Consensus Estimate by an average of 6.7% in the trailing four quarters. Moreover, its long-term earnings per share (EPS) growth rate of 19% and positive estimate revisions over the past seven days bode well.
Campbell Soup has seen positive estimate revisions for the current fiscal year over the past 30 days. The company’s VGM score of ‘B’ bodes well.
Conagra Brands, with a long-term EPS growth rate of 8%, has posted positive earnings surprises in three out of the past four quarters now. Also, the company has seen its estimates move north in the past 30 days.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>