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Things You Must Know Before Brown-Forman's (BF.B) Q2 Earnings

Zacks Equity Research

Brown-Forman Corporation BF.B is set to release second-quarter fiscal 2020 results on Dec 5, before the market opens.

The leading producer and distributor of premium alcoholic beverages delivered a positive earnings surprise of 5.4% in the last reported quarter. Moreover, its bottom line beat estimates by 7%, on average, over the trailing four quarters.

The Zacks Consensus Estimate for the company’s fiscal second-quarter earnings is pegged at 53 cents, which suggests a 1.9% increase from the year-ago quarter’s reported figure. Notably, the consensus mark has been unchanged in the past 30 days. The consensus estimate for fiscal second-quarter sales is pegged at $974 million, indicating 7% growth from the prior-year quarter’s reported number.

Brown-Forman Corporation Price and EPS Surprise

 

Brown-Forman Corporation Price and EPS Surprise

Brown-Forman Corporation price-eps-surprise | Brown-Forman Corporation Quote

Key Factors to Note

Brown-Forman has been witnessing a positive earnings surprise trend on robust brand portfolio, expansion plans, product innovation and shareholder-friendly initiatives. It has been experiencing solid improvement in underlying sales, owing to broad-based growth across geographies and balanced contribution from the brand portfolio.

The company has also been gaining from sustained sales growth in its portfolio of premium spirit brands, particularly bourbon and tequila. Additionally, international expansion for the Jack Daniel’s trademark has been a major contributor to sales growth. These trends are expected to have aided the company’s earnings and sales performance in the fiscal second quarter as well.

Additionally, its continued focus on pricing, product innovation and expanding operations in emerging markets to boost operational performance and strengthen market position is anticipated to get reflected in the results for the fiscal second quarter .

However, Brown-Forman has been grappling with a soft margin trend due to tariff-related and higher input costs, particularly of agave and wood. In the last reported quarter, management had predicted tariff-related and higher input costs will affect gross margin growth throughout fiscal 2020. It expects cost of tariffs to have negatively impacted gross margin and bottom line in the fiscal second quarter.

Furthermore, the impacts of tariffs imposed on American spirits are anticipated to get reflected in the company’s top-line number for the quarter under review.

Zacks Model

Our proven model does not conclusively predict 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. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Brown-Forman carries a Zacks Rank #3 but an Earnings ESP of 0.00% makes surprise prediction difficult.

Stocks Poised to Beat Estimates

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

Costco Wholesale Corporation COST presently has an Earnings ESP of +1.01% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

General Mills, Inc GIS currently has an Earnings ESP of +1.58% and a Zacks Rank #3.

lululemon athletica inc LULU has an Earnings ESP of +0.73% and a Zacks Rank #3 at present.

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Brown-Forman Corporation (BF.B) : Free Stock Analysis Report
 
General Mills, Inc. (GIS) : Free Stock Analysis Report
 
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Costco Wholesale Corporation (COST) : Free Stock Analysis Report
 
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