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Things to Note Ahead of Brown-Forman's (BF.B) Q3 Earnings

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Brown-Forman Corporation (BF.B - Free Report) is slated to release third-quarter fiscal 2022 results on Mar 3. The alcoholic beverage bigwig is likely to deliver revenue and earnings growth in the to-be-reported quarter. The Zacks Consensus Estimate for fiscal third-quarter revenues is pegged at $1 billion, indicating an increase of 10.3% from that reported in the year-ago quarter.

The consensus mark for the to-be-reported quarter’s earnings is pegged at 48 cents per share, indicating a 6.7% increase from the year-ago period’s reported figure. Earnings estimates for the fiscal third quarter have been unchanged in the past 30 days.

The company delivered a negative earnings surprise of 9.3% in the last reported quarter. Moreover, its earnings underperformed the Zacks Consensus Estimate by 5.32%, on average, in the trailing four quarters.

BrownForman Corporation Price and EPS Surprise

 

BrownForman Corporation Price and EPS Surprise

BrownForman Corporation price-eps-surprise | BrownForman Corporation Quote

Key Factors to Note

Brown-Forman has been witnessing strong underlying sales trends, driven by solid performances in international and emerging markets, as well as growth in the Travel Retail channel. Positive price mix and higher volumes are also expected to have aided the top line in the to-be-reported quarter. Strong demand for premium bourbons and Jack Daniel’s RTDs has been aiding sales growth. The Woodford Reserve and the Old Forester trademarks have been mainly driving growth of the bourbon category in the United States. Higher volume and prices for tequilas, Herradura and el Jimador have been other drivers.

The company’s third-quarter fiscal 2022 performance is expected to have benefited from its focus on investing in the diversification of its brand portfolio to drive growth. Its investments in brands center around broadening the Jack Daniel’s family of brands, while also exiting the weaker brands and expanding the fast-growing premium spirits categories.

However, soft margins and higher costs have been hurting the bottom line for the past few quarters. The company’s operating margin in the fiscal third quarter is expected to have been hurt by operating expense deleverage and supply-chain headwinds.

On its last reported quarter’s earnings call, the company expected supply-chain constraints and higher freight costs to persist throughout fiscal 2022, reflecting notable impacts in the to-be-reported quarter.

Brown-Forman has been witnessing operating expense deleverage due to higher SG&A expenses and advertising costs. Higher SG&A expenses mainly relate to higher compensation expenses, increase in non-income tax reserves and cycling against lower discretionary spend in the prior-year quarter.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Brown-Forman this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Brown-Forman has a Zacks Rank #3 and an Earnings ESP of 0.00%.

Stocks With Favorable Combination

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

DICK'S Sporting Goods (DKS - Free Report) currently has an Earnings ESP of +4.86% and a Zacks Rank #1. The company is anticipated to have registered top and bottom-line growth in fourth-quarter fiscal 2021. The Zacks Consensus Estimate for DKS’ quarterly earnings moved up by a penny in the last 30 days to $3.39 per share, suggesting 39.5% growth from the year-ago quarter's reported number.

You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for DICK'S Sporting's quarterly revenues is pegged at $3.31 billion, suggesting growth of 6% from the figure reported in the prior-year quarter. DKS has delivered an earnings beat of 104.2%, on average, in the trailing four quarters.

BJ's Wholesale Club (BJ - Free Report) currently has an Earnings ESP of +0.33% and a Zacks Rank of 3. The company is expected to have registered top and bottom-line growth in fourth-quarter fiscal 2021. The Zacks Consensus Estimate for BJ’s quarterly revenues is pegged at $4.41 billion, which suggests a rise of 11.7% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for BJ’s quarterly earnings moved up by a penny in the last seven days to 75 cents per share, suggesting 7.1% growth from the year-ago quarter's reported number. BJ has delivered an earnings beat of 17.7%, on average, in the trailing four quarters.

Casey's General Stores (CASY - Free Report) currently has an Earnings ESP of +5.19% and a Zacks Rank #3. The company is expected to register top and bottom-line growth when it reports fourth-quarter fiscal 2021 numbers. The Zacks Consensus Estimate for CASY’s quarterly earnings moved up 1.4% in the last seven days to $1.45 per share, suggesting growth of 39.4% from the year-ago quarter's reported number.

The Zacks Consensus Estimate for Casey's quarterly revenues is pegged at $3.06 billion, which suggests growth of 52.3% from the figure reported in the prior-year quarter. CASY has delivered an earnings beat of 20.1%, on average, in the trailing four quarters.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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