On Jul 4, 2014, we issued an updated research report on
) following the company's strong fourth-quarter fiscal 2014
We are optimistic about this alcoholic-beverage company after it
posted fourth quarter earnings per share of 62 cents, which handily
surpassed the Zacks Consensus Estimate of 59 cents and rose 17%
year over year. The strong bottom-line results were primarily
attributable to solid top-line growth, prudent cost management and
lower effective tax rate.
Brown-Forman reported net sales of $893 million, marking a rise
of 3% from the prior-year quarter. After deducting excise taxes,
sales came in at $689 million, up 4.4% from the prior-year figure
of $660 million. The rise was primarily driven by strong demand for
whiskey across the company's operating regions along with its
geographical expansion initiatives. The Zacks Consensus Estimate
for the quarter was $703 million.
Further, bolstered by the better-than-expected fourth-quarter
results, Brown-Forman expects the growth story to continue in
fiscal 2015 driven by solid worldwide demand for American whiskey.
Therefore, the company anticipates underlying and reported sales
will grow in the range of 6% to 8% in fiscal 2015.
Moreover, operating income is expected to increase in the band
of 9% to 11% on an underlying as well as reported basis. Based on
the above expectations, the company projected earnings to be in the
band of $3.25 to $3.45 per share for fiscal 2015.
Apart from strong fourth-quarter fiscal 2014 results and an
impressive guidance for fiscal 2015, the company has been
performing well on the back of brand building and inorganic growth
We expect the company's growth momentum to continue, given its
sustained focus on pricing, product innovation and penetration into
the emerging markets, which will help in boosting its operational
performance and strengthening its position. Moreover, we consider
Brown-Forman's constant focus on developing the premium Jack
Daniel's brand through innovation and changes in packaging to have
Other Stocks to Consider
Currently, Brown-Forman carries a Zacks Rank #2 (Buy). A
better-ranked stocks in the beverages-alcohol industry is
Boston Beer Inc.
) which carries a Zacks Rank #1 (Strong Buy). Other stocks
performing well in the sector include
Constellation Brands Inc.
Molson Coors Brewing Co.
), both carrying a Zacks Rank #2.
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