Brown-Forman (BF.B 55.88, +0.03, +0.05%) will report fiscal fourth quarter
(April) results tomorrow morning and will host a call at 10:00 a.m. ET.
Brown-Forman is best known for its iconic Jack Daniel's Tennessee Whiskey, but the company also owns Finlandia Vodka and el Jimador and Herradura tequilas, among other spirits brands.
Fourth quarter revenue is expected to grow 9%, but profit is expected to fall. The company said creating a charitable foundation would have a $0.10/share negative impact on the fourth quarter. It appears fourth quarter EPS would be up close to 10% excluding that item.
Brown Forman is looking to cap off an impressive year of accelerating growth. The stock surged to all-time highs following blow-out second quarter results last December. The company has exceeded estimates on the top line three quarters in a row after missing estimates three out of four quarters in FY17.
Year-to-date underlying sales are up 7% with operating income 11%. Sales of the Jack Daniel’s family of brands are up 7% (underlying) while premium and tequila brands outperform. Underlying sales are up 5% in the US and 15% in emerging markets. Underlying sales exclude acquisitions and divestitures, foreign exchange, and estimated changes in distributor inventories.
The company expects FY18 EPS of $1.56-1.61 (excluding $0.03/share from tax reform and $0.10/share from the charitable donation), net sales growth of 6% to 7%, and operating income growth of 8% to 9%.
Brown-Forman will guide for FY19. The Street expects EPS up 17% to $1.83/share with sales growth slowing to 6% from 9% this year.
Just over one year ago, Constellation Brands (STZ) reportedly offered to acquire the company. The fifth generation Brown family quickly reiterated that the company was not for sale.
Brown-Forman has an approximately $30 bln enterprise value, which is about 26x EBITDA estimates for the year. Constellation (STZ) has a $53 bln enterprise value at circa 17x EBITDA estimates while Diageo (DEO) has a $105 bln EV trading at 18x EBITDA estimates.
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