Brown-Forman Faces Challenges Amid Market Gains
Shares of Brown-Forman Corporation (BF.B) have struggled while competing with broader market trends.
Based in Louisville, Kentucky, Brown-Forman Corporation (BF.B) is known for manufacturing, distilling, bottling, and marketing a range of alcoholic beverages. With a market cap of $19 billion, the company boasts a diverse portfolio that includes well-known brands like Jack Daniel’s, Woodford Reserve, and Old Forester.
Over the last year, BF.B has notably lagged behind the overall market. The stock has declined 31.7% over the past 52 weeks, while the S&P 500 Index ($SPX) has soared 30.1%. This year alone, shares of Brown-Forman have fallen 29.4%, contrasting sharply with a 24.1% gain from the SPX.
When focusing on consumer staples, the contrast deepens. The Consumer Staples Select Sector SPDR Fund (XLP) increased by 15.5% in the last year, with an 11.4% rise year-to-date.
On August 29, Brown-Forman announced its Q1 earnings results, revealing a net sales drop of 8.4% to $951 million. This decline came due to decreased revenues across both domestic and international markets. Factors influencing this downturn included the timing of shipments last year and the implementation of new pricing strategies. Additionally, earnings per share (EPS) fell 14.6% to $0.41, missing analysts’ expectations by 10.9%.
Despite the disappointing results, BF.B’s stock saw a 1.3% increase after the earnings announcement, as the company reaffirmed its full-year guidance for organic net sales and operating income growth, estimating growth between 2% and 4%. The company’s commitment to substantial capital expenditures between $195 million and $205 million indicates a focus on future growth.
Looking ahead at the fiscal year ending in April 2025, analysts predict a 15.9% decline in EPS, estimating it at $1.80. Brown-Forman’s earnings history has been inconsistent; it has met or exceeded consensus estimates in three of the last four quarters, missing on one occasion.
Among the 14 analysts tracking BF.B, the consensus rating is “Hold,” which comes from three “Strong Buy,” nine “Hold,” and two “Strong Sell” recommendations.
Current ratings show a slight decrease in bullish sentiment compared to a month ago when four analysts suggested a “Strong Buy.” In a recent update from Evercore ISI analyst Robert Ottenstein, the “In Line” rating was maintained, but the price target was reduced to $45, suggesting an 11.7% upside potential. The mean price target stands at $47, indicating a 16.6% potential increase from current share prices. The highest target of $61 implies a considerable upside of 51.4%.
On the date of publication, Neharika Jain did not hold (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. More news from Barchart
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
