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Brown-Forman B (BF.B)
NYSE:BF.B
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Brown-Forman B
(NYSE:BF.B)
76Outperform
Positive Factors
Earnings
For the second consecutive quarter, BFB outperformed expectations and held guidance, which is encouraging considering all the challenges currently facing distilled spirits and whiskey.
Strategic Initiatives
BFB announced a series of strategic initiatives aimed at enhancing long-term growth, which are expected to net $70-$80 million in annualized savings.
Negative Factors
Consumer Perception
The brand's move into flavors and RTDs has expanded the revenue base but diluted the brand image, altering consumers' perception.
Tariffs
Pending EU tariff risk on American Whiskey, which may be reinstated at 50%, will likely act as an overhang on any incremental positive new category developments.
Brown-Forman B (BF.B) vs. S&P 500 (SPY)
Market Cap
$16.03B
Dividend Yield2.57%
Average Volume (3M)3.05M
Price to Earnings (P/E)16.6
Beta (1Y)0.58
Revenue Growth-5.11%
EPS Growth3.64%
CountryUS
Employees5,700
SectorConsumer Defensive
Sector Strength91
IndustryBeverages - Wineries & Distilleries
Share Statistics
EPS (TTM)2.09
Shares Outstanding303,539,950
10 Day Avg. Volume2,062,778
30 Day Avg. Volume3,054,157
Financial Highlights & Ratios
PEG Ratio4.55
Price to Book (P/B)N/A
Price to Sales (P/S)4.05
Price to Cash Flow (P/CF)12.90
P/FCF Ratio12.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$37.06Price Target Upside9.13% Upside
Rating ConsensusHold
Number of Analyst Covering10
Brown-Forman B Business Overview & Revenue Model
Company DescriptionBrown-Forman Corporation is a global leader in the beverage alcohol industry, primarily engaged in the production, marketing, and distribution of high-quality spirits and wines. Founded in 1870 and headquartered in Louisville, Kentucky, the company is renowned for its diverse portfolio of brands, including Jack Daniel's, Woodford Reserve, and Old Forester in the whiskey segment, as well as premium tequila brands like Herradura and El Jimador. Brown-Forman operates in numerous regions worldwide, serving markets in North America, Europe, Asia, and Latin America.
How the Company Makes MoneyBrown-Forman generates revenue through the sale of its spirits and wines across various channels, including wholesale distribution to retailers, direct-to-consumer sales, and through partnerships with distributors and retailers globally. The company's key revenue streams include the sale of its flagship whiskey brand, Jack Daniel's, which accounts for a significant portion of its earnings, as well as other spirits like bourbon, tequila, and vodka. Brown-Forman's earnings are also bolstered by its strategic partnerships and distribution agreements that enable its products to reach a wider audience. Additionally, the company's focus on innovation and brand investment helps maintain its competitive edge and drive growth in both established and emerging markets.
Brown-Forman B Financial Statement Overview
Summary
Brown-Forman B demonstrates strong profitability and financial stability, with healthy margins and a solid equity position. The company faces challenges in revenue growth, which it needs to address to sustain its financial performance. Cash flow shows positive trends, but further improvements in cash conversion and management could enhance financial flexibility.Income Statement
Brown-Forman B has maintained a strong Gross Profit Margin of 59.3% in the TTM, indicative of effective cost management. The Net Profit Margin stands at 24.4%, reflecting solid profitability. However, a slight decline in revenue over the TTM period by -3.18% suggests the need for revenue growth initiatives. The EBIT margin remains robust at 31.6%, supporting operational efficiency.78
Positive
Balance Sheet
The company maintains a healthy equity ratio of 47.4% in the TTM, highlighting financial stability. However, the Debt-to-Equity Ratio of 0.67 suggests moderate leverage, which is manageable but requires monitoring. Return on Equity (ROE) is strong at 25.9%, signifying effective use of shareholders' equity to generate profit.75
Positive
Cash Flow
Free Cash Flow grew by 27.45% in the TTM, indicating improved cash generation. The Operating Cash Flow to Net Income ratio of 0.74 suggests efficient conversion of income to cash, though there is room for improvement. The Free Cash Flow to Net Income ratio of 0.54 shows a positive cash flow position but indicates the need for careful cash management.70
Positive
| Breakdown | |||||
| TTM | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 4.04B | 4.18B | 4.23B | 3.93B | 3.46B | 3.36B | Gross Profit |
| 2.40B | 2.53B | 2.49B | 2.39B | 2.09B | 2.13B | EBIT |
| 1.28B | 1.41B | 1.13B | 1.20B | 1.17B | 1.09B | EBITDA |
| 1.46B | 1.51B | 1.31B | 1.31B | 1.09B | 1.17B | Net Income Common Stockholders |
| 989.00M | 1.02B | 783.00M | 838.00M | 903.00M | 827.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 155.70M | 446.00M | 374.00M | 868.00M | 1.15B | 675.00M | Total Assets |
| 3.44B | 8.17B | 7.78B | 6.37B | 6.52B | 5.78B | Total Debt |
| 640.60M | 3.10B | 2.91B | 2.27B | 2.56B | 2.60B | Net Debt |
| 484.90M | 2.65B | 2.54B | 1.40B | 1.41B | 1.93B | Total Liabilities |
| 1.46B | 4.65B | 4.51B | 3.64B | 3.87B | 3.80B | Stockholders Equity |
| 1.98B | 3.52B | 3.27B | 2.74B | 2.66B | 1.98B |
| Cash Flow | Free Cash Flow | ||||
| 534.00M | 419.00M | 457.00M | 798.00M | 755.00M | 611.00M | Operating Cash Flow |
| 731.00M | 647.00M | 640.00M | 936.00M | 817.00M | 724.00M | Investing Cash Flow |
| 270.00M | 49.00M | -1.35B | -127.00M | 98.00M | -141.00M | Financing Cash Flow |
| -952.00M | -618.00M | 239.00M | -1.04B | -485.00M | -191.00M |
Brown-Forman B Technical Analysis
Negative
33.96
Price Trends
33.75
Positive
35.39
Negative
39.97
Negative
Market Momentum
0.10
Negative
50.07
Neutral
61.80
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BF.B, the sentiment is Negative. The current price of 33.96 is above the 20-day moving average (MA) of 33.72, above the 50-day MA of 33.75, and below the 200-day MA of 39.97, indicating a neutral trend. The MACD of 0.10 indicates Negative momentum. The RSI at 50.07 is Neutral, neither overbought nor oversold. The STOCH value of 61.80 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for BF.B.
Brown-Forman B Risk Analysis
Brown-Forman B disclosed 24 risk factors in its most recent earnings report. Brown-Forman B reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Brown-Forman B Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $2.81B | 16.85 | 11.55% | 1.63% | 0.15% | 35.56% | |
76 Outperform | $16.03B | 16.55 | 27.99% | 2.57% | -5.11% | 3.64% | |
72 Outperform | $59.80B | 16.92 | 35.83% | 3.67% | -1.21% | -8.89% | |
70 Outperform | $2.75B | 49.80 | 5.99% | ― | 0.21% | -20.69% | |
68 Neutral | $11.51B | 10.91 | 8.54% | 3.07% | -0.64% | 22.45% | |
65 Neutral | $33.55B | 49.10 | -0.98% | 2.15% | 2.47% | -105.09% | |
64 Neutral | $9.21B | 14.61 | 4.29% | 186.43% | 3.98% | 5.57% |
* Consumer Defensive Sector Average
Performance Comparison
BF.B
Brown-Forman B
33.96
-13.71
-28.76%
SAM
Boston Beer
247.89
-37.74
-13.21%
CCU
Compania Cervecerias Unidas SA
15.38
3.14
25.65%
STZ
Constellation Brands
185.35
-71.09
-27.72%
DEO
Diageo
110.57
-24.05
-17.87%
TAP
Molson Coors
56.80
-4.80
-7.79%
Brown-Forman B Earnings Call Summary
Earnings Call Date: Mar 5, 2025 | % Change Since: 4.56% | Next Earnings Date: Jun 4, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed outlook with strong growth in emerging markets and key brands like Woodford Reserve, but faced challenges with overall net sales decline, competitive pressures in the tequila market, and uncertainties related to tariffs. The workforce reduction and restructuring efforts indicate a focus on long-term efficiency and growth.Highlights
Sequential Improvement in Top and Bottom Line Results
The company delivered sequentially stronger top and bottom line results as it entered the second half of the fiscal year, with January being the fifth consecutive month of positive 3-month rolling organic net sales trends.
Strong Performance of Key Brands
Woodford Reserve and Jack Daniel's Tennessee Whiskey were the largest drivers of organic net sales growth, with Woodford Reserve achieving 10% organic net sales growth driven by higher volumes and positive price mix.
Emerging Markets Lead Growth
Emerging international markets delivered an 8% organic net sales increase, led by strong double-digit growth in Turkey and Brazil.
Successful Route-to-Consumer Strategy
The company successfully executed its route-to-consumer changes in Japan and is on schedule to launch its own distribution in Italy by May 1, 2025.
Lowlights
Overall Decrease in Reported Net Sales
Reported net sales decreased by 4% in the first 9 months of fiscal 2025, with organic net sales growing only 2% after adjustments.
Challenges in the Tequila Market
El Jimador and Herradura tequilas faced challenges in the U.S. and Mexico due to a competitive environment and economic challenges, leading to declines in performance.
Impact of Tariffs and Geopolitical Uncertainties
The operating environment remains dynamic with uncertainties related to tariffs, particularly with the potential reintroduction of EU tariffs.
Restructuring and Workforce Reduction
The company announced a 12% reduction in its global workforce and the closure of its Louisville-based Cooperage, expecting to incur $60 to $70 million in restructuring charges.
Company Guidance
In the Brown-Forman Corporation's third-quarter earnings call for fiscal year 2025, the company highlighted a number of key metrics and strategic actions. Organic net sales grew by 2%, while reported net sales saw a 4% decrease due to divestitures and foreign exchange impacts. The company experienced a 10% organic net sales growth for Woodford Reserve, driven by higher volumes and positive price mix, with Jack Daniel's Tennessee Whiskey also showing a 2% increase in organic net sales. The company maintained its full-year outlook for organic net sales and operating income growth despite ongoing challenges, including tariffs and a dynamic operating environment. Brown-Forman reported a 6% decrease in organic gross profit, alongside a 13% decline in reported operating income, yet achieved a 5% growth in organic operating income. The company also discussed its strategic initiatives, including reducing its workforce by 12%, anticipated to deliver annual savings of $70 million to $80 million. These changes come alongside a restructuring of the executive leadership team and the closure of the Louisville-based Cooperage, which is expected to generate over $30 million in proceeds. Brown-Forman reaffirmed its commitment to innovation and strategic investments, poised to leverage and adapt to the evolving market conditions.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.