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Things to Note Ahead of Brown-Forman's (BF.B) Q4 Earnings

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·4 min read
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Brown-Forman Corporation BF.B is slated to release fourth-quarter fiscal 2021 results on Jun 9. The alcoholic beverage bigwig is likely to deliver revenue and earnings growth in the to-be-reported quarter. The Zacks Consensus Estimate for fiscal fourth-quarter revenues is pegged at $788.8 million, indicating an increase of 11.3% from the figure reported in the year-ago quarter.

Further, the consensus mark for the to-be-reported quarter’s earnings is pegged at 30 cents per share, suggesting an increase of 11.1% from the year-ago period’s reported figure. Earnings estimates for fiscal fourth-quarter earnings have moved down by a penny in the past 30 days.

The company delivered an earnings beat of 4.7% in the last reported quarter. Moreover, its earnings outperformed the Zacks Consensus Estimate by 7.04%, 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 benefiting from its efforts to capitalize on opportunities in the shift in consumption to at-home occasions, with increased investments in the off-premise and e-premise channels. The company has been benefiting from the increased sale of spirits in the off-premise and convenience formats, which is likely to have continued to aid fiscal fourth-quarter performance.

Further, it has been witnessing accelerated demand trends in its spirits business in the past few months, as consumers have been experimenting with making cocktails and margaritas at home. The rise in the trend is expected to have boosted the demand for spirit-based RTD cocktails in fourth-quarter fiscal 2021.

The company has been confident of capitalizing on its American Whiskey strategy and has been benefitting from investments in its brand portfolio. Notably, premium bourbon brands, including Woodford Reserve and Old Forester have been aiding Brown-Forman’s underlying sales growth. Moreover, the company has been witnessing strong underlying sales growth for Herradura and el Jimador in the United States. Additionally, underlying sales are expected to have been aided by gains in the United States and developed international markets as well as recovery in emerging markets.

Additionally, the company’s stringent cost-management initiatives are expected to have partly aided the bottom line in the to-be-reported quarter.

However, the pandemic-led restrictions on the on-premise and Travel Retail channels have been partly hurting sales on a year-over-year basis, which is anticipated to have continued in the fiscal fourth quarter. Also, higher input costs and unfavorable mix shifts due to the pandemic are expected to have hurt gross margin.

Despite cost-management initiatives, higher SG&A expenses and advertising costs are expected to have led to operating expense deleverage in the fiscal fourth quarter. On the last reported quarter’s earnings call, management anticipated advertising spending to accelerate significantly over the balance of the current fiscal year, suggesting increased costs for the to-be-reported quarter.

What the Zacks Model Unveils

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 has a Zacks Rank #4 and an Earnings ESP of -4.13%.

Stocks With Favorable Combinations

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

J & J Snack Foods Corp. JJSF has an Earnings ESP of +15.68% and it presently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

General Mills, Inc. GIS currently has an Earnings ESP of +2.06% and a Zacks Rank #3.

Campbell Soup Company CPB has an Earnings ESP of +2.05% and a Zacks Rank #3 at present.

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