Valued at $21.3 billion by market cap, Brown-Forman Corporation (BF.B) is a leading player in the alcoholic beverages industry, known for its premium spirits and wines. Based in Louisville, Kentucky, the company owns iconic brands like Jack Daniel's and Woodford Reserve, with a strong global market presence.
Shares of this spirits company have significantly underperformed the broader market over the past 52 weeks. BF.B has declined 32.6% during this period, contrasting with the S&P 500 Index's ($SPX) nearly 27% rally. In 2024, Brown-Forman shares dipped 21%, compared to SPX's 16.8% YTD gain.
Zooming in further, Brown-Forman's performance lags behind the Nasdaq Food & Beverage ETF (FTXG), which has recorded a marginal decline over the past 52 weeks and a 3.8% increase on a YTD basis.
Brown-Forman's underperformance over the past year is due to inflation-driven weak consumer demand and cautious inventory management by distributors and retailers. The company's bloated inventories and significant capital expenditures have also put pressure on free cash flow and margins, contributing to its stock's decline.
Furthermore, despite beating Q4 profit estimates on the back of successful price hikes, the stock dropped 5.9% on Jun. 5 after the company reported a decline in net sales, missing analysts' expectations, alongside a drop in organic whiskey sales due to lower volumes for key Jack Daniel's products. Additionally, the forecasted annual organic sales growth fell short of analysts' expectations, further contributing to the stock's decline.
For the current fiscal year, ending in April 2025, analysts expect BF.B's EPS to decline 14% year over year to $1.84 per share. The company's earnings surprise history is mixed. It topped or met the consensus estimates in three of the last four quarters while missing on one another occasion.
The consensus rating among the 13 analysts covering the stock is a “Hold.” That’s based on three “Strong Buy” ratings, nine “Holds,” and one “Strong Sell.”
This configuration has remained fairly steady over the past months.
On Aug. 20, JP Morgan analyst Andrea Teixeira maintained a “Neutral” rating on Brown-Forman and lowered the price target to $43.
The mean price target of $47.92 represents a premium of only 6.3% to BF.B's current levels. The Street-high price target of $66 implies a modest potential upside of 46.3% from the current price levels.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
