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Category: Stock Market and Brown-Forman (BF.B)
Date: 2 September 2020 Stock Price of Brown-Forman: $80.85 We take a look at the earnings release for the 1st quarter of their 2021 fiscal year of beverage brand owner Brown-Forman whose brands include Jack Daniels and el Jimador tequila whose revenues declined by -2% for the quarter compared to the same quarter of the previous year. And they recorded net income of $324 million for the quarter.
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- I am very pleased with our performance at the start of this fiscal year and thankful to our 4,800 employees worldwide who made these results possible - Lawson Whiting, President and Chief Executive Officer. "
About Brown-Forman
1870:
With $5,500 in saved and borrowed money, George Garvin Brown, a young pharmaceuticals salesman in Louisville, Kentucky, starts J.T.S. Brown and Bro. with his half-brother. They sell whisky in sealed glass bottles to assure its quality, an innovative approach at a time when whisky is commonly sold by the barrel. Old Forester Kentucky Straight Bourbon Whisky is the flagship brand. After several name changes and the dissolution of the original partnership, George Garvin enters in a partnership with George Forman, his accountant and friend, and Brown-Forman is created
Today:
For almost 150 years, Brown-Forman Corporation has enriched the experience of life by responsibly building fine quality beverage alcohol brands, including Jack Daniel’s Tennessee Whiskey, Jack Daniel’s & Cola, Jack Daniel’s Tennessee Honey, Jack Daniel’s Tennessee Fire, Gentleman Jack, Jack Daniel’s Single Barrel, Finlandia, Korbel, el Jimador, Woodford Reserve, Old Forester, Canadian Mist, Herradura, New Mix, Sonoma-Cutrer, Early Times, Chambord, BenRiach and GlenDronach. Brown-Forman’s brands are supported by over 4,800 employees and sold in approximately 170 countries worldwide. The image below shows some of the main highlights for Brown-Forman for their 2019 fiscal year
Brown-Forman Corporation was incorporated under the laws of the State of Delaware in 1933, successor to a business founded in 1870 as a partnership and later incorporated under the laws of the Commonwealth of Kentucky in 1901. We primarily manufacture, bottle, import, export, market, and sell a wide variety of alcoholic beverages under recognized brands. We employ approximately 4,700 people on six continents (excluding individuals that work on a part-time or temporary basis), including approximately 1,200 people in Louisville, Kentucky, USA, home of our world headquarters. We are the largest American-owned spirits and wine company with global reach.
With $5,500 in saved and borrowed money, George Garvin Brown, a young pharmaceuticals salesman in Louisville, Kentucky, starts J.T.S. Brown and Bro. with his half-brother. They sell whisky in sealed glass bottles to assure its quality, an innovative approach at a time when whisky is commonly sold by the barrel. Old Forester Kentucky Straight Bourbon Whisky is the flagship brand. After several name changes and the dissolution of the original partnership, George Garvin enters in a partnership with George Forman, his accountant and friend, and Brown-Forman is created
Today:
For almost 150 years, Brown-Forman Corporation has enriched the experience of life by responsibly building fine quality beverage alcohol brands, including Jack Daniel’s Tennessee Whiskey, Jack Daniel’s & Cola, Jack Daniel’s Tennessee Honey, Jack Daniel’s Tennessee Fire, Gentleman Jack, Jack Daniel’s Single Barrel, Finlandia, Korbel, el Jimador, Woodford Reserve, Old Forester, Canadian Mist, Herradura, New Mix, Sonoma-Cutrer, Early Times, Chambord, BenRiach and GlenDronach. Brown-Forman’s brands are supported by over 4,800 employees and sold in approximately 170 countries worldwide. The image below shows some of the main highlights for Brown-Forman for their 2019 fiscal year
Brown-Forman Corporation was incorporated under the laws of the State of Delaware in 1933, successor to a business founded in 1870 as a partnership and later incorporated under the laws of the Commonwealth of Kentucky in 1901. We primarily manufacture, bottle, import, export, market, and sell a wide variety of alcoholic beverages under recognized brands. We employ approximately 4,700 people on six continents (excluding individuals that work on a part-time or temporary basis), including approximately 1,200 people in Louisville, Kentucky, USA, home of our world headquarters. We are the largest American-owned spirits and wine company with global reach.
Woodford Reserve, one of Brown-Forman's whiskey brands
Overview of Brown-Forman's 1st quarter 2021 earnings
The numbers below refers to the latest quarter unless specified otherwise
- Net sales: $753 million (down from $766 million for the same quarter of the previous year)
- Net sales decreased by -2% over the last 12 months
- Cost of sales: $288 million (up from $268 million for the same quarter of the previous year)
- Cost of sales increased by 7% over the last 12 months
- Net income: $324 million (up 74% from $186 million for the same quarter of the previous year)
- Diluted earnings per share: $0.67 (up 73% from $0.39 for the same quarter of the previous year)
- Cash dividends paid per common share: $0.1743
- Dividend yield: 0.81%
- Shares in issue: 480.429 million
- Cash and cash equivalents: $908 million
- Cash and cash equivalents per share: $1.88
- Cash and cash equivalents makes up 2.36% of Brown-Forman's market capital
- Cash and cash equivalents makes up 14.7% of Brown-Forman's total assets
- Inventories: $1.741 billion
- Inventories makes up 28.1% of Brown-Forman's total assets
- Goodwill of Brown-Forman: $760 million
- Goodwill per share: $1.58
- Goodwill makes up 12.3% of Brown-Forman's total assets
- Stockholders’ equity: $2.150 billion
- Stockholders equity per share: $4.48
- So Brown-Forman is trading at 17.9 times its stockholders equity per share, which is well outside the expected range of between 2 and 4 times that most firms tend to trade at.
- For some perspective the average price to book value of firms in the S&P 500 is 3.7
- Cash generated from operations : $91 million
- Cash generated per share: $0.19
Brown-Forman commentary on their 1st quarter 2021 earnings
Louisville, KY, September 2, 2020 - Brown-Forman Corporation (NYSE: BFA, BFB) announced financial results for its first quarter of fiscal 2021 with reported net sales1 down 2% to $753 million (+3% on an underlying basis ) compared to the same prior-year period. Further, reported operating income increased 56% to $387 million (+15% on an underlying basis) and diluted earnings per share grew 73% to $0.67.
“I am very pleased with our performance at the start of this fiscal year and thankful to our 4,800 employees worldwide who made these results possible,” said Lawson Whiting, President and Chief Executive Officer. He added, “Despite being faced with significant ongoing challenges, our business performed well during the quarter though much uncertainty remains in the current environment. We believe we are well positioned to navigate the headwinds we face today and emerge from the COVID-19 environment in a stronger position.”
“I am very pleased with our performance at the start of this fiscal year and thankful to our 4,800 employees worldwide who made these results possible,” said Lawson Whiting, President and Chief Executive Officer. He added, “Despite being faced with significant ongoing challenges, our business performed well during the quarter though much uncertainty remains in the current environment. We believe we are well positioned to navigate the headwinds we face today and emerge from the COVID-19 environment in a stronger position.”
First Quarter of Fiscal 2021 Brand Results
The Jack Daniel’s family of brands provided positive underlying net sales growth driven by Jack Daniel’s RTDs, the ongoing launch of Jack Daniel’s Tennessee Apple, and broad-based volume growth from Jack Daniel’s Tennessee Honey. Gentleman Jack contributed volumetric gains in the United States partially offset by unfavorable channel mix. Underlying net sales declines for Jack Daniel’s Tennessee Whiskey were driven by lower volumes in emerging markets and Travel Retail reflecting travel bans and other restrictions related to COVID-19, along with unfavorable channel mix in the United States and developed international markets due to significant restrictions in the on-premise channel. Brown-Forman’s portfolio of premium bourbon brands, including Woodford Reserve and Old Forester, maintained their double-digit underlying net sales growth. Woodford Reserve’s gains were driven by volumetric growth in the United States, partially offset by volume declines in Travel Retail. Old Forester’s strong double-digit underlying net sales growth was powered by ongoing volumetric gains and favorable mix from the brand’s high-end expressions.
The company’s tequila brands provided strong underlying net sales growth led by higher volumes of New Mix supported by increased consumer demand in Mexico. el Jimador’s underlying net sales were fueled by higher volumes and pricing in the United States and Mexico, while Herradura’s underlying net sales decline was driven by lower volumes and unfavorable mix in Mexico, partially offset by higher prices, favorable product mix, and higher volumes in the United States.
Financial Stewardship
On July 23, 2020, the Brown-Forman Board of Directors declared a regular quarterly cash dividend of $0.1743 per share on the Class A and Class B common stock. This marks the company’s 75th consecutive year of paying and 36th year of uninterrupted increases in their regular quarterly cash dividend. The quarterly cash dividend is payable on October 1, 2020, to stockholders of record on September 4, 2020. Fiscal Year 2021 Outlook The company continues to face substantial uncertainty due to the rapidly evolving environment with the COVID-19 pandemic and its effect on the global economy. As a result of this ongoing uncertainty and expected volatility, the company remains unable to provide quantitative guidance for fiscal year 2021.
Jane Morreau, Executive Vice President and Chief Financial Officer, added, “We believe that we continue to be in a strong financial position and that our capacity to generate solid operating cash flows remain sound, allowing us to navigate this pandemic as circumstances evolve.” As a result, the company maintains expectations to fully fund ongoing investments in the business and pay regular dividends. “Longer term, we are confident about the growth opportunities for our brands and the resilience of our business. We believe the actions we have taken solidify our foundation to continue to grow consistently as we have done for decades,” added Lawson Whiting, President and Chief Executive Officer.
The Jack Daniel’s family of brands provided positive underlying net sales growth driven by Jack Daniel’s RTDs, the ongoing launch of Jack Daniel’s Tennessee Apple, and broad-based volume growth from Jack Daniel’s Tennessee Honey. Gentleman Jack contributed volumetric gains in the United States partially offset by unfavorable channel mix. Underlying net sales declines for Jack Daniel’s Tennessee Whiskey were driven by lower volumes in emerging markets and Travel Retail reflecting travel bans and other restrictions related to COVID-19, along with unfavorable channel mix in the United States and developed international markets due to significant restrictions in the on-premise channel. Brown-Forman’s portfolio of premium bourbon brands, including Woodford Reserve and Old Forester, maintained their double-digit underlying net sales growth. Woodford Reserve’s gains were driven by volumetric growth in the United States, partially offset by volume declines in Travel Retail. Old Forester’s strong double-digit underlying net sales growth was powered by ongoing volumetric gains and favorable mix from the brand’s high-end expressions.
The company’s tequila brands provided strong underlying net sales growth led by higher volumes of New Mix supported by increased consumer demand in Mexico. el Jimador’s underlying net sales were fueled by higher volumes and pricing in the United States and Mexico, while Herradura’s underlying net sales decline was driven by lower volumes and unfavorable mix in Mexico, partially offset by higher prices, favorable product mix, and higher volumes in the United States.
Financial Stewardship
On July 23, 2020, the Brown-Forman Board of Directors declared a regular quarterly cash dividend of $0.1743 per share on the Class A and Class B common stock. This marks the company’s 75th consecutive year of paying and 36th year of uninterrupted increases in their regular quarterly cash dividend. The quarterly cash dividend is payable on October 1, 2020, to stockholders of record on September 4, 2020. Fiscal Year 2021 Outlook The company continues to face substantial uncertainty due to the rapidly evolving environment with the COVID-19 pandemic and its effect on the global economy. As a result of this ongoing uncertainty and expected volatility, the company remains unable to provide quantitative guidance for fiscal year 2021.
Jane Morreau, Executive Vice President and Chief Financial Officer, added, “We believe that we continue to be in a strong financial position and that our capacity to generate solid operating cash flows remain sound, allowing us to navigate this pandemic as circumstances evolve.” As a result, the company maintains expectations to fully fund ongoing investments in the business and pay regular dividends. “Longer term, we are confident about the growth opportunities for our brands and the resilience of our business. We believe the actions we have taken solidify our foundation to continue to grow consistently as we have done for decades,” added Lawson Whiting, President and Chief Executive Officer.
Brown-Forman's company (NYSE: BF.B) stock price history
The image below shows the stock price history of Brown-Forman over the last 5 years. 5 years ago the stock price was around $39.30 a stock and its currently trading at $80.85 a stock. That's a very strong return of 105% provided to Brown-Forman stockholders over the last 5 years.
The stock of Brown-Forman is trading at a lot closer to its 52 week high of $83.40 than it is to its 52 week low of $44.68 which to us is a clear indication that the short term sentiment and momentum of Brown-Forman stock is positive
The stock of Brown-Forman is trading at a lot closer to its 52 week high of $83.40 than it is to its 52 week low of $44.68 which to us is a clear indication that the short term sentiment and momentum of Brown-Forman stock is positive
Brown-Forman stock price history over the last 5 years
Brown-Forman (BF.B) stock vs Diageo (DGE) stock
The image below shows the stock price performance of Brown-Forman (BF.B) and that of rival distillery Diageo (DGE) over the last 5 years. Over the last 5 years the stock of Brown-Forman provided a return of 143.93% while the stock of Diageo provided a return of 39.09%. So the stock of Brown-Forman has easily outperformed that of Diageo.
Brown-Forman (BF.B) stock vs Diageo (DGE) stock
Recent coverage of Brown-Forman
The extract below covers the latest regarding Brown-Forman as obtained from Nasdaq.com
Brown-Forman Corporation BF.B reported first-quarter fiscal 2021 results, wherein earnings and sales beat the Zacks Consensus Estimate. Moreover, earnings improved significantly year over year driven by strong volume performance as well as cost discipline. Meanwhile, the impact of the coronavirus outbreak on the on-premise channel continued to mar the top line. Given the unpredictable nature of the crisis, the company did not provide any guidance for fiscal 2021. Brown-Forman’s earnings per share of 67 cents improved 73% year over year and surpassed the Zacks Consensus Estimate of 31 cents.
Read the full article here
Brown-Forman Corporation BF.B reported first-quarter fiscal 2021 results, wherein earnings and sales beat the Zacks Consensus Estimate. Moreover, earnings improved significantly year over year driven by strong volume performance as well as cost discipline. Meanwhile, the impact of the coronavirus outbreak on the on-premise channel continued to mar the top line. Given the unpredictable nature of the crisis, the company did not provide any guidance for fiscal 2021. Brown-Forman’s earnings per share of 67 cents improved 73% year over year and surpassed the Zacks Consensus Estimate of 31 cents.
Read the full article here
Jack Daniels Still No 5
Brown-Forman (NYSE: BF.B) latest stock valuation
Based on the Brown-Forman's 1st quarter 2021 earnings report what do we value the group's stock at? Based on their earnings reported our valuation model prices a target price (full value price) for Brown-Forman stock at $69.60 a stock.
We therefore believe the stock of Brown-Forman is overvalued.
We usually recommend that long term and value investors look to enter a stock at least 10% below our target price (full value price) which in this case is $69.60, a good entry point would therefore be at $62.70 or below. We expect the stock of Brown-Forman to pull back slightly from its current price to levels closer to our target price (full value price) in coming weeks and months.
We therefore believe the stock of Brown-Forman is overvalued.
We usually recommend that long term and value investors look to enter a stock at least 10% below our target price (full value price) which in this case is $69.60, a good entry point would therefore be at $62.70 or below. We expect the stock of Brown-Forman to pull back slightly from its current price to levels closer to our target price (full value price) in coming weeks and months.
Next earnings release of Brown-Forman
It is expected that Brown-Forman will release their 2nd quarter 2021 earnings report in mid December 2020