Brown-Forman Faces Challenges Despite Strong Brand Portfolio
Overview of Company and Market Position
Brown-Forman Corporation (BF.B), located in Louisville, Kentucky, is known for its wide range of alcoholic beverages. This includes wines, whiskey spirits, ready-to-drink cocktails, vodkas, gin, rum, brandy, bourbons, and more. With a market cap of $19.5 billion, the company has a significant presence across the Americas, Europe, Asia, and beyond.
Companies with a valuation of $10 billion or more, known as “large-cap stocks,” include Brown-Forman. Its substantial market cap highlights its strong influence in the wineries and distilleries industry. The company is recognized through various brands, including Jack Daniel’s, Old Forester, Gentleman Jack, Woodford Reserve, and Coopers’ Craft.
Stock Performance Overview
Recent performance has been a concern for Brown-Forman investors. The stock has dropped 32.2% from its 52-week high of $60.97, reached on March 5. Over the last three months, BF.B has shown a 13.4% decrease, while the First Trust Nasdaq Food & Beverage ETF (FTXG) fell just 11.3% during the same period.
Long-term trends are also troubling. Year-to-date, BF.B stock is down 27.6%, and over the past 52 weeks, it has lost 30%. In contrast, the FTXG only dipped 5.3% in 2024 and 5.6% over the last year.
The stock’s bearish movement is evidenced by its performance relative to moving averages. For most of the past year, BF.B has been below its 200-day moving average, and it has not surpassed its 50-day moving average since late October, although there have been some fluctuations.
Recent Earnings Report Insights
Following the release of its Q2 results on December 5, Brown-Forman’s stock surged 10.7%. The company’s earnings and revenues exceeded Wall Street’s expectations. However, despite improvements in international markets and travel retail, overall net sales are still down. This quarter, net sales decreased by 1.1% from the previous year, totaling $1.1 billion.
On a brighter note, the company has managed to reduce operating expenses, which contributed to margin expansion and a slight rise in operating income to $341 million. The earnings per share (EPS) of $0.55 exceeded analysts’ projections by 7.8%.
Competitive Landscape and Analyst Opinion
When compared to its peers, Brown-Forman has struggled. The Duckhorn Portfolio, Inc. (NAPA) has experienced a 12.6% gain year-to-date and a 14.8% increase over the past year.
Among 16 analysts covering BF.B stock, the consensus recommendation is a “Hold.” The average price target of $47.50 reflects a potential 14.8% upside from current 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.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
