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Factors Likely to Influence Brown-Forman (BF.B) in Q4 Earnings

Brown-Forman Corporation (BF.B) is slated to release fourth-quarter fiscal 2023 results on Jun 7. The alcoholic beverage bigwig’s revenues and earnings are expected to have increased in the to-be-reported quarter. The Zacks Consensus Estimate for fiscal fourth-quarter revenues is pegged at $1.01 billion, indicating growth of 1.1% from that reported in the year-ago quarter.

The consensus mark for the to-be-reported quarter’s earnings is pegged at 45 cents per share, suggesting growth of 45.2% from the year-ago period’s recorded number. Earnings estimates for the fiscal fourth quarter have moved up by a penny in the past 30 days.

The company delivered earnings in line with the Zacks Consensus Estimate in the last reported quarter. In the trailing four quarters, its earnings outperformed the Zacks Consensus Estimate by 5.7%, on average.

Brown-Forman Corporation Price and EPS Surprise

 

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 strong sales trends, driven by increased demand for its brands, growth across all geographic clusters and the Travel Retail channel, which have been driving organic sales growth. Sales have been benefiting from an increase in distributor inventories.

On the last reported quarter’s earnings call, management expected strength in its brand portfolio, strong consumer demand and the return of inventories to more normalized levels to aid organic sales growth throughout fiscal 2023. The persistence of these trends is likely to have aided the company’s performance in the fiscal fourth quarter.

Growth in the tequila categories, mainly Herradura and el Jimado, has also been a key driver in recent quarters. BF.B has been benefiting from recent acquisitions, portfolio premiumization, product innovation and strategic relationships.

The company’s investments in brands have been focused on broadening the Jack Daniel’s family of brands, while exiting the weaker brands and expanding the fast-growing premium spirits categories. Continued investments to diversify its brand portfolio is likely to have contributed meaningfully to top-line growth in the to-be-reported quarter.

Sales in the fiscal fourth quarter are also expected to have benefited from the continued consumer interest in flavor and convenience, which boosted the performance of Jack Daniel’s Ready-to-Drink (RTD), Jack Daniel’s Tennessee Honey and Jack Daniel’s Tennessee Fire.

However, the company has been witnessing higher input costs and supply-chain disruptions. It has also been witnessing higher advertising expenses due to continued investments in its brands. Its fiscal fourth-quarter gross margin is expected to reflect the impacts of input cost inflation, elevated costs resulting from supply-chain disruptions and adverse currency rates.

Despite the cost-management initiatives, Brown-Forman’s higher SG&A and advertising costs have been concerning. 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. Higher compensation expenses are expected to have led to higher SG&A expenses.

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 an Earnings ESP of -10.89% and a Zacks Rank #2.

Stocks With Favorable Combinations

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

Campbell Soup CPB currently has an Earnings ESP of +0.58% and a Zacks Rank #3. The company is anticipated to register top-line growth in third-quarter fiscal 2023. The Zacks Consensus Estimate for CPB’s quarterly revenues is pegged at $2.2 billion, suggesting growth of 4.2% from the figure reported in the prior-year quarter.

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

The Zacks Consensus Estimate for Campbell Soup’s quarterly earnings was unchanged in the last 30 days at 65 cents per share, suggesting a 7.1% decline from the year-ago quarter's reported number. CPB delivered an earnings beat of 10.7%, on average, in the trailing four quarters.

Constellation Brands STZ currently has an Earnings ESP of +7.57% and a Zacks Rank #3. The company is expected to register top and bottom-line growth when it reports first-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for STZ’s quarterly earnings moved up by a couple of cents in the last seven days to $2.82 per share, suggesting growth of 6% from the year-ago quarter's reported number.

The Zacks Consensus Estimate for Constellation Brands’ quarterly revenues is pegged at $2.5 billion, which suggests growth of 4.1% from the figure reported in the prior-year quarter. STZ delivered a negative earnings surprise of 5.2%, on average, in the trailing four quarters.

Academy Sports and Outdoors ASO currently has an Earnings ESP of +1.76% and a Zacks Rank of 3. The company is expected to register top and bottom-line declines when it reports first-quarter fiscal 2023 results. The Zacks Consensus Estimate for ASO’s quarterly revenues is pegged at $1.5 billion, which suggests a decline of 1% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for ASO’s bottom line was unchanged in the last 30 days at $1.61 per share, which suggests a decline of 6.9% from the figure reported in the prior-year quarter. ASO has delivered an earnings surprise of 12%, on average, in the trailing four quarters.

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

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Brown-Forman Corporation (BF.B) : Free Stock Analysis Report

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Academy Sports and Outdoors, Inc. (ASO) : Free Stock Analysis Report

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