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Will Brown-Forman (BF.B) Retain Earnings Beat Trend in Q4?

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Brown-Forman Corporation (BF.B - Free Report) is set to report fourth-quarter fiscal 2018 results on Jun 6, before the market opens. In the last quarter, the company delivered a positive earnings surprise of 7.3%. The company’s third-quarter fiscal 2018 results marked its third straight earnings and sales beat. It also marked the company’s sixth straight quarter of growth in underlying sales.

This leading producer and distributor of premium alcoholic beverages delivered a positive earnings surprise of 9.3% in the trailing four quarters.

What to Expect?

The question lingering in investors’ minds now is whether Brown-Forman will be able to post positive earnings surprise in the quarter to be reported. The Zacks Consensus Estimate for the quarter under review is 22 cents per share, reflecting a decline of 26.7% from the year-ago quarter. We note that the Zacks Consensus Estimate for the quarter has been trending down in the last 30 days. Analysts polled by Zacks anticipate revenues of $747.7 million, up nearly 7.7% from the year-ago quarter.

Brown-Forman Corporation Price, Consensus and EPS Surprise

Brown-Forman Corporation Price, Consensus and EPS Surprise | Brown-Forman Corporation Quote

Moreover, we note that the stock has outperformed the industry in the last three months. The company’s shares have moved up 2.4% while the industry declined 7.5%.



Factors at Play

Brown-Forman’s strong performance can be attributed to its strong brand portfolio, efforts to expand globally, strategic initiatives and a robust outlook. The company is also gaining from solid growth in underlying sales, improved margins, continued momentum at its focus categories and strength in Jack Daniels brand. Further, management remains optimistic about its premium American whiskey and tequila brands.

Brown-Forman remains confident of consistent growth in fiscal 2018 and updated its earnings guidance to account for new tax reforms. Management believes that it is on track to deliver high-quality, top-tier results in fiscal 2018. The company reiterated its underlying sales growth of 6-7% for the fiscal. It now envisions adjusted earnings per share of $1.56-$1.61, reflecting mid-teens growth year over year.

Moreover, 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. Brown-Forman anticipates witnessing growth on the back of strong worldwide demand for its authentic American whiskey brands, consumer interest in flavored whiskey and a rising trend in premium spirits.

However, the company anticipates a volatile global economic situation, mainly in emerging markets, and intense competition in developed economies to hinder results.

What the Zacks Model Unveils

Our proven model does not conclusively show that Brown-Forman is going to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Brown-Forman has an Earnings ESP of -3.01%. Although the company has a Zacks Rank #3, which increases the predictive power of ESP, we need to have a positive ESP to be confident about earnings surprise.

Stocks Poised to Beat Earnings Estimates

Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

United Natural Foods Inc. (UNFI - Free Report) has an Earnings ESP of +1.73% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ulta Beauty, Inc. (ULTA - Free Report) has an Earnings ESP of +0.46% and a Zacks Rank #2.

Dollar General Corp. (DG - Free Report) has an Earnings ESP of +0.95% and a Zacks Rank #2.

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