Since Brown-Forman Corporation (NYSE:BF.B) released its earnings in April 2019, the consensus outlook from analysts appear in-line with historical trends, with earnings growth rate expected to be 2.4% in the upcoming year, relative to the past five-year average earnings growth of 2.6% per year. Presently, with latest-twelve-month earnings at US$835m, we should see this growing to US$855m by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Brown-Forman in the longer term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
What can we expect from Brown-Forman in the longer term?
Longer term expectations from the 17 analysts covering BF.B’s stock is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To get an idea of the overall earnings growth trend for BF.B, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
From the current net income level of US$835m and the final forecast of US$999m by 2022, the annual rate of growth for BF.B’s earnings is 5.8%. This leads to an EPS of $2.14 in the final year of projections relative to the current EPS of $1.74. With a current profit margin of 25%, this movement will result in a margin of 26% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Brown-Forman, I've compiled three relevant aspects you should further research:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Brown-Forman worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Brown-Forman is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Brown-Forman? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.