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Brown Forman A (BF.A)
NYSE:BF.A
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Brown Forman A
(NYSE:BF.A)
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Rating:65Neutral
Price Target:
$29.00
▲(12.14% Upside)
Action:ReiteratedDate:03/05/26
The score is driven primarily by strong underlying profitability and solid free-cash-flow generation with improving leverage, but is held back by a clear bearish price trend versus key moving averages and a cautious earnings outlook that still calls for declines amid material near-term headwinds (used barrels and Canada). Dividend yield provides some support, though valuation is harder to gauge given the missing/invalid P/E input.
Positive Factors
High margins and cash generation
Sustained high gross and net margins signal durable pricing power across premium brands. Strong free cash flow (~$730M TTM) provides repeated capacity to fund capex, marketing, dividends and buybacks, supporting long-term investment and shareholder returns despite cyclical sales swings.
Improving leverage and balance-sheet flexibility
Progressively lower leverage increases financial flexibility and resilience to shocks, reducing interest burden and improving capacity for buybacks and dividend consistency. Manageable debt levels (though absolute ~$2.7B) enhance the firm's ability to invest in brand building and navigate industry cycles.
Strong brand portfolio, geographic reach and innovation traction
Iconic brands plus successful NPD validate R&D and go-to-market capabilities. Innovation that gains repeat purchase and RTD traction supports long-term premiumization and category relevance, while broad geographic distribution enables scaling of winners and diversifying growth across markets and channels.
Negative Factors
Collapse in used-barrel sales
A >60% drop in used-barrel sales is a material hit to near-term topline and reflects reliance on ancillary revenue that can be volatile. The decline reduces overall revenue and cash flow, pressuring reported results and highlighting sensitivity to non-core revenue swings that can persist across a fiscal year.
Trade disruption in Canada
A regulatory/trade-driven removal from Canadian provincial shelves is a structural market access issue until resolved. This causes a multi-point drag on sales, disrupts distribution and creates longer-term uncertainty requiring reallocation of marketing and logistics resources to mitigate lost demand.
Product-mix pressure from RTDs and agency brands
A shift toward lower‑margin RTDs and agency brands reduces blended margins and returns unless offset by premiumization or cost reductions. Structural category shifts toward RTDs may persist, pressuring long-term margin sustainability and requiring active portfolio and pricing management to protect EPS.
Brown Forman A (BF.A) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$12.26B
Dividend Yield3.41%
Average Volume (3M)177.61K
Price to Earnings (P/E)―
Beta (1Y)0.49
Revenue Growth-4.59%
EPS Growth-19.19%
CountryUS
Employees5,700
SectorConsumer Defensive
Sector Strength42
IndustryBeverages - Wineries & Distilleries
Share Statistics
EPS (TTM)0.58
Shares Outstanding168,614,780
10 Day Avg. Volume138,674
30 Day Avg. Volume177,610
Financial Highlights & Ratios
PEG Ratio-1.31
Price to Book (P/B)4.12
Price to Sales (P/S)4.14
P/FCF Ratio38.21
Enterprise Value/Market Cap1.19
Enterprise Value/Revenue3.72
Enterprise Value/Gross Profit6.26
Enterprise Value/Ebitda12.26
Forecast
1Y Price Target
$29.00Price Target Upside12.14% Upside
Rating ConsensusModerate Sell
Number of Analyst Covering1
EPS Forecast (FY)1.69
Revenue Forecast (FY)$3.86B
Brown Forman A Business Overview & Revenue Model
Company DescriptionBrown-Forman Corporation, together with its subsidiaries, manufactures, distills, bottles, imports, exports, markets, and sells various alcoholic beverages. It provides spirits, wines, whiskey spirits, whiskey-based flavored liqueurs, ready-to-drink and ready-to-pour products, ready-to-drink cocktails, vodkas, tequilas, champagnes, brandy, bourbons, and liqueurs. The company offers its products primarily under the Jack Daniel's, Reserve, Old Forester, Coopers' Craft, Herradura, el Jimador, New Mix, Korbel Champagnes, Sonoma-Cutrer, Finlandia, GlenDronach, Benriach, Glenglassaugh, Chambord, Slane, and Fords Gin brands. It is also involved in the sale of used barrels, bulk whiskey, and wine; and provision of contract bottling services. The company serves retail customers and consumers through distributors or state governments; and retailers, wholesalers, and provincial governments directly. It has operations in the United States, Germany, Australia, the United Kingdom, Mexico, and internationally. The company was founded in 1870 and is headquartered in Louisville, Kentucky.
How the Company Makes MoneyBrown-Forman generates revenue primarily through the sale of its extensive range of alcoholic beverages. The company's revenue model relies on direct sales to wholesalers and retailers, as well as through e-commerce channels. Key revenue streams include the sale of its flagship brands, particularly whiskey, which accounts for a substantial portion of its earnings. The company benefits from strong brand loyalty and recognition, allowing it to maintain premium pricing. Additionally, Brown-Forman has established significant partnerships with distributors around the world, enhancing its market reach and operational efficiency. The company also invests in marketing and promotional activities to support its brands, which contributes to sustained growth in sales. Overall, Brown-Forman's financial success is driven by its commitment to quality, strategic brand management, and a global distribution network.
Brown Forman A Earnings Call Summary
Earnings Call Date:Dec 04, 2025
(Q2-2026)
| % Change Since: |
Next Earnings Date:Jun 10, 2026
Earnings Call Sentiment Neutral
The call presented a mix of clear strategic and operational positives — strong emerging-market and Travel Retail growth, successful innovation (Jack Daniel's Blackberry and New Mix RTD), improved cash flow and margin benefits from A&D activities, and completed route-to-consumer transitions — alongside sizable, company-specific negatives (used barrel sales collapse and the Canada trade ban) and soft developed-market demand that materially weighed on reported results and EPS. Management reaffirmed guidance, emphasized cost discipline and capital return actions, and signaled confidence in execution, but acknowledged persistent near-term headwinds and product-mix challenges.Q2-2026 Updates
Positive Updates
Top-line Performance (Reported vs Organic)
Reported net sales declined 4% in the first half of fiscal 2026, while organic net sales were flat (0%) after adjusting for acquisition & divestiture (A&D) impacts related to Korbel and Sonoma-Cutrer.
Emerging Markets Strength
Emerging international markets delivered double-digit organic net sales growth of 12% in the first half, led by Mexico (18% organic growth driven by RTDs) and Brazil (more than 20% organic growth driven by Jack Daniel's variants and premiumization initiatives).
Global Travel Retail Growth
Global Travel Retail channel organic net sales increased 6% in the first half, benefiting from passenger volumes surpassing pre-pandemic levels and serving as a key brand-building platform.
Successful Innovation — Jack Daniel's Tennessee Blackberry
Blackberry launch exceeded expectations in the U.S. with shipments initially outpacing depletions; phased international rollouts (U.K., Germany, France, Poland, Czechia, Turkey and GTR) showed strong initial retail and consumer response (e.g., Tesco 'best NPD' with double-digit repeat purchase, Amazon preorder sellouts).
New Mix RTD Performance
New Mix, a tequila-based RTD, continued to deliver very strong double-digit growth and led category gains in Mexico, contributing meaningfully to RTD-led growth in the region (Mexico organic net sales +18%).
Margin and Cost Management Progress
Reported gross margin expanded 30 basis points to 59.5% in H1, driven by a 190 bps A&D benefit (absence of Sonoma-Cutrer TSA and conclusion of Korbel relationship) partially offset by cost pressures. Organic SG&A decreased 4% following workforce restructuring; organic A&P was down 1% aligned with depletion-based top-line trends.
Improved Cash Generation and Capital Returns
Cash flow from operations increased by $163 million to $292 million; free cash flow rose by $179 million to $236 million. Board approved a 2% quarterly dividend increase (42nd consecutive annual increase) and authorized up to $400 million in share repurchases, with $99 million repurchased as of Oct 31, 2025.
Reaffirmed Full-Year Guidance and Strategic Actions
Management reaffirmed fiscal 2026 outlook, expecting low single-digit organic net sales decline and reported gross margin expansion. Ongoing actions include route-to-consumer transitions (U.S., Japan, Italy), focus on premium-plus and RTD innovation, and workforce restructuring to improve agility and reduce SG&A.
Negative Updates
Severe Decline in Used Barrel Sales
Used barrel sales plunged by more than 60% (management cited ~61% decline in H1), a material headwind that materially reduced first-half organic net sales and was highlighted as a significant fiscal-2026-year issue for the business.
Major Canada Impact from Trade Dispute
Organic net sales in Canada declined by over 60% as U.S.-produced beverage alcohol products remained largely off Canadian provincial shelves, contributing to a multi-point negative impact on top-line performance and assumed to persist through the fiscal year.
Developed International Markets Weakness
Developed international markets collectively declined 6% organically in H1; notable market weakness included the U.K. (organic net sales down 13%) and Germany (organic net sales down 8%) driven by pressured consumer spending and elevated promotional activity.
Reported Profitability and EPS Pressure
Reported operating income decreased 9% and organic operating income decreased 4% in the first half; diluted earnings per share declined 13% to $0.83 per share, including a $22 million nonoperating post-retirement expense tied to workforce initiatives.
Product Mix and Margin Headwinds from RTDs and Agency Brands
Management flagged product-mix headwinds due to faster growth of the RTD portfolio and agency brands (notably in Japan and Mexico), which are lower-margin relative to some core spirits, creating a negative price/mix effect (50 bps unfavorable in H1).
Higher Input Costs and Lower Production
Gross margin benefited from A&D actions but faced 110 basis points of pressure from higher costs largely due to lower production volumes, input-cost inflation timing, and ongoing inventory adjustments; some commodity offsets (e.g., lower agave) are present but full benefits are phased.
Shipment / Depletion Dynamics and Transitional Disruption
Shipments came in ahead of depletions in H1 (in part due to new U.S. distributor transitions and Blackberry initial shipments), creating temporary channel imbalances; management expects the shipments/depletions gap to narrow as transitions normalize.
Top-line Guidance Reflects Continued Near-Term Decline
Company continues to forecast a low single-digit decline in organic net sales for fiscal 2026 and expects organic operating income to decline in the low single-digit range, reflecting ongoing macro/geopolitical headwinds and the two company-specific issues (used barrels and Canada).
Company Guidance
Brown‑Forman reaffirmed its full‑year fiscal 2026 outlook, guiding to a low single‑digit decline in organic net sales with shipments expected to be roughly in line with depletions, and forecasting reported gross‑margin expansion as A&D benefits (about +190 bps) more than offset negative price/mix (≈‑50 bps) and higher costs (≈‑110 bps). In the first half, reported net sales fell 4% while organic net sales were flat after A&D adjustments; reported gross profit decreased 4% with a 59.5% reported gross margin, reported operating income was down 9% (organic operating income down 4%), and diluted EPS declined 13% to $0.83. Management expects used barrel sales to be lower by more than half of FY2025 levels (H1 used barrel organic net sales were down >60%) and assumes Canada headwinds will persist (Canada organic net sales also down >60%); geographic expectations include emerging markets +12% YTD, Global Travel Retail +6%, developed international −6% and the U.S. roughly flat in H1. Financial/capital metrics and returns include an updated full‑year capex range of $110–$120M (previously $125–$135M), cash from operations of $292M (up $163M), free cash flow of $236M (up $179M), an effective tax‑rate outlook of ~21–23%, a 2% quarterly dividend increase (42nd consecutive annual increase) and a Board‑authorized $400M buyback (≈$99M repurchased as of Oct. 31). Finally, management reiterated no assumed change to current tariff impacts and expects organic operating income to decline in the low single‑digit range for FY2026.Brown Forman A Financial Statement Overview
Summary
High-margin profile (TTM gross margin ~59%, net margin ~21%) with improving leverage (debt-to-equity ~0.59) and solid free cash flow (~$730M). Offsets include inconsistent revenue trends, net income below prior-year peak, and only moderate debt coverage from operating cash flow (~0.56x), pointing to mixed momentum despite strong profitability.Income Statement
BF.A shows strong underlying profitability with TTM (Trailing-Twelve-Months) gross margin of ~59% and net margin of ~21%, reflecting solid brand pricing power. However, the top line has been inconsistent: annual revenue declined slightly in 2024 and 2025, and while TTM shows a sharp rebound in revenue growth, profitability is somewhat lower than the prior-year peak (net income down versus 2024/2025). Overall, margins are healthy but growth and earnings momentum are mixed.78
Positive
Balance Sheet
Leverage looks manageable and improving: debt-to-equity is ~0.59 in TTM (Trailing-Twelve-Months) versus ~0.68 in 2025 and ~0.88–0.89 in 2023–2024. Equity has expanded and returns on equity remain strong at ~20% TTM, though below the higher levels seen in 2021–2024. The main watch item is the absolute debt load (~$2.7B) and the fact that returns have moderated from prior highs.74
Positive
Cash Flow
Cash generation is solid with TTM (Trailing-Twelve-Months) operating cash flow of ~$861M and free cash flow of ~$730M, and free cash flow is up strongly versus the prior period. Free cash flow covers net income well (about 0.85x), indicating earnings quality is generally good. The weaker point is that operating cash flow covers only about ~0.56x of total debt in TTM, suggesting debt paydown capacity is reasonable but not exceptionally strong, and cash flow has been more volatile across the annual periods.70
Positive
| Breakdown | TTM | Apr 2025 | Apr 2024 | Apr 2023 | Apr 2022 | Apr 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 3.92B | 3.98B | 4.18B | 4.23B | 3.93B | 3.46B |
| Gross Profit | 2.33B | 2.34B | 2.53B | 2.49B | 2.39B | 2.09B |
| EBITDA | 1.19B | 1.29B | 1.51B | 1.19B | 1.27B | 1.24B |
| Net Income | 807.00M | 869.00M | 1.02B | 783.00M | 838.00M | 903.00M |
Balance Sheet | ||||||
| Total Assets | 8.30B | 8.09B | 8.17B | 7.78B | 6.37B | 6.52B |
| Cash, Cash Equivalents and Short-Term Investments | 402.00M | 444.00M | 446.00M | 374.00M | 868.00M | 1.15B |
| Total Debt | 2.75B | 2.73B | 3.10B | 2.91B | 2.27B | 2.56B |
| Total Liabilities | 4.22B | 4.09B | 4.65B | 4.51B | 3.64B | 3.87B |
| Stockholders Equity | 4.08B | 3.99B | 3.52B | 3.27B | 2.74B | 2.66B |
Cash Flow | ||||||
| Free Cash Flow | 730.00M | 431.00M | 419.00M | 457.00M | 798.00M | 755.00M |
| Operating Cash Flow | 861.00M | 598.00M | 647.00M | 640.00M | 936.00M | 817.00M |
| Investing Cash Flow | -83.00M | 249.00M | 49.00M | -1.35B | -127.00M | 98.00M |
| Financing Cash Flow | -1.03B | -843.00M | -618.00M | 239.00M | -1.04B | -485.00M |
Brown Forman A Technical Analysis
Negative
25.86
Price Trends
28.08
Negative
28.02
Negative
28.44
Negative
Market Momentum
0.02
Positive
35.90
Neutral
25.56
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BF.A, the sentiment is Negative. The current price of 25.86 is below the 20-day moving average (MA) of 29.69, below the 50-day MA of 28.08, and below the 200-day MA of 28.44, indicating a bearish trend. The MACD of 0.02 indicates Positive momentum. The RSI at 35.90 is Neutral, neither overbought nor oversold. The STOCH value of 25.56 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for BF.A.
Brown Forman A Risk Analysis
Brown Forman A disclosed 24 risk factors in its most recent earnings report. Brown Forman A reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Brown Forman A Peers Comparison
UnderperformOutperform
Sector (62)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
68 Neutral | $2.36B | 19.30 | 12.31% | ― | -1.13% | 24.34% | |
67 Neutral | $27.06B | 11.96 | 14.29% | 2.92% | -5.57% | 119.49% | |
65 Neutral | $12.26B | ― | 20.67% | 3.41% | -4.59% | -19.19% | |
62 Neutral | $20.33B | 14.63 | -3.31% | 3.23% | 1.93% | -12.26% | |
60 Neutral | $7.77B | 11.49 | 14.82% | 5.64% | 2.71% | 4.90% | |
60 Neutral | $45.19B | 6.03 | 22.03% | 4.80% | 0.22% | -38.76% | |
54 Neutral | $9.52B | -4.26 | -18.35% | 4.08% | -4.01% | -339.22% |
* Consumer Defensive Sector Average
BF.A
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.