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Brown-Forman (BF.B) to Retain Its Earnings Beat Streak in Q2

Brown-Forman Corporation (BF.B) is slated to release second-quarter fiscal 2023 results on Dec 7. The alcoholic beverage bigwig is likely to deliver revenue and earnings growth in the to-be-reported quarter. The Zacks Consensus Estimate for fiscal second-quarter revenues is pegged at $1.09 billion, indicating an increase of 10% from that reported in the year-ago quarter.

The consensus mark for the to-be-reported quarter’s earnings is pegged at 55 cents per share, suggesting growth of 12.5% from the year-ago period’s recorded number. Earnings estimates for the fiscal second quarter have moved down by a penny in the past 30 days.

The company delivered an earnings surprise of 8.33% in the last reported quarter. Its earnings outperformed the Zacks Consensus Estimate by 10.2%, on average, in the trailing four quarters.

BrownForman Corporation Price and EPS Surprise

 

BrownForman Corporation Price and EPS Surprise
BrownForman Corporation Price and EPS Surprise

BrownForman Corporation price-eps-surprise | BrownForman Corporation Quote

Key Factors to Note

Brown-Forman has been witnessing strong sales trends, driven by increased demand for its brands, mainly the resurgence of Jack Daniel’s Tennessee Whiskey, and growth across all geographic clusters. Sales have been benefitting from an increase in distributor inventories. All of the company’s geographic clusters and Travel Retail have been reporting robust sales growth, driven by a robust volume. The persistence of these trends is likely to have aided the company’s performance in the fiscal second quarter.

Growth in the tequila categories, mainly Herradura and el Jimado, has also been a key driver in recent quarters. On the last reported quarter’s earnings call, management expected the strength in its brands and strong consumer demand to continue aiding the top line in the quarters ahead.

BF.B’s commitment to cost-management efforts is expected to have boosted earnings growth in the fiscal second quarter. Brown-Forman is likely to have witnessed operating expense leverage in the to-be-reported quarter, aiding gross margin growth. The company’s gross margin is expected to have gained from the removal of EU and UK tariffs on American whiskey. Lower SG&A expenses are expected to have boosted the operating margin.

However, higher advertising expenses due to continued investments in its brands are likely to have partly dented margins and the bottom line in the to-be-reported quarter. Elevated discretionary spend and expenses like special employee bonuses and costs related to the impacts of Russia’s invasion of Ukraine are anticipated to have been other deterrents.

What the Zacks Model Unveils

Our proven model conclusively predicts an earnings beat for Brown-Forman this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Brown-Forman has a Zacks Rank #3 and an Earnings ESP of +3.37%.

Other Stocks With Favorable Combination

Here are some other companies you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat:

Archer Daniels Midland ADM has an Earnings ESP of +0.76% and currently sports a Zacks Rank #1. The company is anticipated to have registered top and bottom-line growth in fourth-quarter 2022. The Zacks Consensus Estimate for ADM’s quarterly earnings moved up 1.3% in the last 30 days to $1.55 per share, suggesting 3.3% growth from the year-ago quarter's reported number.

You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Archer Daniels’ quarterly revenues is pegged at $26.4 billion, suggesting growth of 14.5% from the figure reported in the prior-year quarter. ADM has delivered an earnings beat of 26.2%, on average, in the trailing four quarters.

Altria Group MO currently has an Earnings ESP of +1.56% and a Zacks Rank #3. The company is expected to register top and bottom-line growth when it reports fourth-quarter 2022 numbers. The Zacks Consensus Estimate for MO’s quarterly earnings was unchanged in the last 30 days at $1.17 per share, suggesting growth of 7.3%% from the year-ago quarter's reported number.

The Zacks Consensus Estimate for Altria Group’s quarterly revenues is pegged at $5.13 billion, which suggests growth of 0.8% from the figure reported in the prior-year quarter. MO has delivered an earnings beat of 0.3%, on average, in the trailing four quarters.

Casey's General Stores CASY currently has an Earnings ESP of +12.58% and a Zacks Rank of 3. The company is expected to have registered top and bottom-line growth in second-quarter fiscal 2023. The Zacks Consensus Estimate for CASY’s quarterly revenues is pegged at $4.2 billion, which suggests a rise of 27.5% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for CASY’s quarterly earnings moved up 5.1% in the last 30 days to $3.10 per share, suggesting 19.7% growth from the year-ago quarter's reported number. CASY has delivered an earnings beat of 1.3%, on average, in the trailing four quarters.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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BrownForman Corporation (BF.B) : Free Stock Analysis Report

Altria Group, Inc. (MO) : Free Stock Analysis Report

Archer Daniels Midland Company (ADM) : Free Stock Analysis Report

Casey's General Stores, Inc. (CASY) : Free Stock Analysis Report

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