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Brown-Forman Corp Registered Shs -B- Non Vtg - Stock Quote BF.B

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Morningstar's Brown-Forman Corp Registered Shs -B- Non Vtg Stock Analysis

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Pricing and On-Premises Strength Drive Sales Outperformance and Strong Q3 Results for Brown-Forman

Sean Dunlop Equity Analyst

Analyst Note

| Sean Dunlop |

Wide-moat Brown-Forman posted strong quarterly results, raising its annual guidance for both organic net sales (to 11%-13% from high single digits) and organic operating income (12%-16%, from high single digits) on the back of strong performance in the whiskey and tequila segments. While the firm continues to navigate raw material cost inflation and supply chain disruptions, which together represented a 110-basis-point drag on gross margins during the fiscal year to date, normalization in agave prices and glass bottle supply should see pressure meaningfully abate over the next few quarters. Notably, though guidance suggests a 1% decline in operating profit for fiscal 2022 (attributable to a 2021 divestiture), it still represents high-teens growth on a two-year stack, with premiumization, at-home mixology, and global brand-building underpinning strength. We expect to raise our $73 fair value estimate by a low-single-digit percentage after digesting results.

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Brown-Forman Corp Registered Shs -B- Non Vtg's Company Profile

Business Description

Brown-Forman is the largest U.S.-domiciled producer of distilled spirits. The firm reports only a single operating segment, and whiskey represents its primary business driver at over 80% of revenue, undergirded by the Jack Daniel’s brand as well as bourbons such as Woodford Reserve and Old Forrester. Notable nonwhiskey offerings include vodkas such as Finlandia and tequilas such as el Jimador and Herradura. The firm operates globally, with products sold in more than 170 countries, and adapts its route-to-consumer model depending on regulation as well as the prevailing competitive dynamics in a given market. For example, it sells through distributors in the U.S. but operates its own logistics apparatus in many other countries. The company remains under the control of the Brown family.

850 Dixie Highway
Louisville, KY, 40210
T +1 502 585-1100
Sector Consumer Defensive
Industry Beverages - Wineries & Distilleries
Most Recent Earnings Jan 31, 2022
Fiscal Year End Apr 30, 2022
Stock Type Classic Growth
Employees 4,700

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