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Here's Why Brown-Forman's (BF.B) Stock Fell Post Q4 Results
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Brown-Forman Corporation (BF.B - Free Report) shares have dropped 7.1% since the company released its fourth-quarter fiscal 2017 results on Jun 7, highlighting a bearish sentiment post the results. Moreover, shares of the company have underperformed the Zacks categorized Beverages–Alcohol industry in the past one month. The company’s shares fell 6.1% compared to the industry’s decline of 3.2%.
So what’s pulling down the stocks of Brown-Forman? Let’s look into some of the factors impacting its performance.
Factors Impacting Performance
We believe that one of the primary reason impacting the company’s stock price is the recently reported dismal fourth quarter results, wherein adjusted earnings per share lagged the Zacks Consensus Estimate and the year-ago figure. This marked the company’s second straight earnings miss and third in the trailing four quarters. With this, Brown-Forman has a trailing four quarter average negative surprise of 2.5%.
Further, net sales dipped year over year mainly affected by acquisition and divestiture activity. This also resulted in a fall in operating margin.
Additionally, the company remains prone to adverse currency movements, which hurt its top-line growth for the fiscal fourth quarter by 3% and fiscal 2017 by 2%. Further, it forecasts currency headwinds to continue in fiscal 2018 that may negatively impact earnings. Going forward, the company also anticipates the volatility in global economy and the competitive landscape to continue to hurt results.
Brown-Forman’s performance is also challenged by the excise tax levied on distilled spirits by governments of respective countries. Apart from this, competitive pressures continue to loom.
Growth Prospects
Brown-Forman gains strength from 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. Its consistent focus on pricing, product innovation and expansion solidify its market position.
While the company expects currency headwinds and the volatile global economic and geopolitical environment to linger, this Zacks Rank #3 (Hold) company remains confident about persistent growth in underlying net sales and operating income in fiscal 2018 backed by Jack Daniel's family of brands, its premium bourbon and tequila brands. Further, growth is likely to come from new product launches.
Bottom Line
Though Brown-Forman’s earnings trend continues to disappoint, we remain confident of its strong brand portfolio, innovations and pricing strategies. These traits should help uplift the company’s performance in the upcoming quarters.
MGP Ingredients has an average positive earnings surprise of 27% over the trailing four quarters and a long-term earnings growth rate of 15%.
Aramark has an average positive earnings surprise of 4.5% over the trailing four quarters and a long-term earnings growth rate of 12%.
B&G Foods has an average positive earnings surprise of 2.1% over the trailing four quarters and a long-term earnings growth rate of 10%.
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It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
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Here's Why Brown-Forman's (BF.B) Stock Fell Post Q4 Results
Brown-Forman Corporation (BF.B - Free Report) shares have dropped 7.1% since the company released its fourth-quarter fiscal 2017 results on Jun 7, highlighting a bearish sentiment post the results. Moreover, shares of the company have underperformed the Zacks categorized Beverages–Alcohol industry in the past one month. The company’s shares fell 6.1% compared to the industry’s decline of 3.2%.
So what’s pulling down the stocks of Brown-Forman? Let’s look into some of the factors impacting its performance.
Factors Impacting Performance
We believe that one of the primary reason impacting the company’s stock price is the recently reported dismal fourth quarter results, wherein adjusted earnings per share lagged the Zacks Consensus Estimate and the year-ago figure. This marked the company’s second straight earnings miss and third in the trailing four quarters. With this, Brown-Forman has a trailing four quarter average negative surprise of 2.5%.
Further, net sales dipped year over year mainly affected by acquisition and divestiture activity. This also resulted in a fall in operating margin.
Additionally, the company remains prone to adverse currency movements, which hurt its top-line growth for the fiscal fourth quarter by 3% and fiscal 2017 by 2%. Further, it forecasts currency headwinds to continue in fiscal 2018 that may negatively impact earnings. Going forward, the company also anticipates the volatility in global economy and the competitive landscape to continue to hurt results.
Brown-Forman’s performance is also challenged by the excise tax levied on distilled spirits by governments of respective countries. Apart from this, competitive pressures continue to loom.
Growth Prospects
Brown-Forman gains strength from 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. Its consistent focus on pricing, product innovation and expansion solidify its market position.
While the company expects currency headwinds and the volatile global economic and geopolitical environment to linger, this Zacks Rank #3 (Hold) company remains confident about persistent growth in underlying net sales and operating income in fiscal 2018 backed by Jack Daniel's family of brands, its premium bourbon and tequila brands. Further, growth is likely to come from new product launches.
Bottom Line
Though Brown-Forman’s earnings trend continues to disappoint, we remain confident of its strong brand portfolio, innovations and pricing strategies. These traits should help uplift the company’s performance in the upcoming quarters.
Key Picks
Until then, investors can focus on better-ranked stocks in the consumer staples space such as, MGP Ingredients, Inc. (MGPI - Free Report) , Aramark (ARMK - Free Report) and B&G Foods, Inc. (BGS - Free Report) . All of them carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
MGP Ingredients has an average positive earnings surprise of 27% over the trailing four quarters and a long-term earnings growth rate of 15%.
Aramark has an average positive earnings surprise of 4.5% over the trailing four quarters and a long-term earnings growth rate of 12%.
B&G Foods has an average positive earnings surprise of 2.1% over the trailing four quarters and a long-term earnings growth rate of 10%.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation. See Them Free>>.