Louisville, Kentucky-based Brown-Forman Corporation (BF.B) manufactures, distills, bottles, imports, exports, markets, and sells various alcoholic beverages. Its offerings include wines, whiskey spirits, ready-to-drink cocktails, vodkas, gin, rum, brandy, bourbons, and more. With a market cap of $22.2 billion, Brown-Forman’s operations span the Americas, Europe, Asia, and internationally.
Companies worth $10 billion or more are generally described as "large-cap stocks," Brown-Forman fits right into that category, with its market cap exceeding this threshold, reflecting its substantial size, influence, and dominance in the beverages - wineries & distilleries industry. It operates brands like Jack Daniel's, Old Forester, Gentleman Jack, Woodford Reserve, Coopers' Craft, and more.
Brown-Forman touched its 52-week high of $63.47 on Sep. 20, 2023, and is now trading 24.9% below that peak. BF.B has gained 9.5% over the past three months, outpacing the Consumer Staples Select Sector SPDR Fund’s (XLP) 6.9% gains over the same time frame.
However, over the longer term, Brown Forman has underperformed XLP. BF.B has declined 24.7% over the past 52 weeks and 16.5% in 2024. lagging behind XLP’s 16.2% gains over the past year and 15.4% returns on a YTD basis.
To confirm the bearish trend and recent turnaround, BF.B has consistently traded below its 200-day moving average over the past year but above its 50-day moving average since late July.
Despite a recent uptick in share prices, Brown-Forman’s latest financial results paint a concerning picture. In fiscal Q1, the beverage giant reported an 8.4% year-over-year decline in net sales, dropping to $951 million and falling short of Wall Street’s expectations. This revenue drop was largely attributed to a 6% decrease in organic sales of its flagship brand, Jack Daniel’s Tennessee Whiskey.
The company’s net income took an even steeper hit, plummeting 15.6% to $195 million, driven by shrinking net margins. Adding to the concerns, Brown-Forman experienced a significant 55.3% decline in cash flow from operations, down to $17 million, raising questions about its ability to generate cash moving forward.
Brown-Forman’s competitor, MGP Ingredients, Inc. (MGPI), has dipped 21.3% over the past 52 weeks and 14.5% in 2024, performing slightly better than BF.B.
Among the 14 analysts covering the BF.B stock, the consensus rating is a “Hold.” Although BF.B is trading above its mean price target of $47, the Street-high target of $61 represents a potential upside of 27.9% from current price levels.
On the date of publication, Aditya Sarawgi 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.
