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Brown-Forman B (BF.B)
NYSE:BF.B
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Brown-Forman B
(NYSE:BF.B)
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Rating:63Neutral
Price Target:
$28.00
▲(10.85% Upside)
Action:ReiteratedDate:03/05/26
The score is primarily supported by strong underlying financial quality (high margins, solid balance sheet, and strong free cash flow). It is held back by weak technical momentum and a cautious near-term outlook from the earnings call (sales and operating income expected to decline amid Canada/used-barrel headwinds), while valuation support comes mainly from the above-average dividend yield given the unavailable P/E signal.
Positive Factors
Cash generation
Consistently strong free cash flow (material YoY improvement and FCF covering a large share of net income) provides durable internal funding for capex, dividends and buybacks. This cash conversion supports financial flexibility and resilience through cyclical demand swings.
Balance sheet & leverage
Improving leverage and solid returns on equity give the company durable financial optionality: lower leverage reduces refinancing risk and supports continued shareholder returns, while strong ROE indicates efficient capital use that sustains long-term return generation.
Brand strength & innovation
Powerful brand portfolio and successful product innovation (e.g., Jack Daniel's Blackberry, RTD growth) coupled with double-digit emerging market gains create structural premiumization and diversification, supporting pricing power and margin durability across cycles.
Negative Factors
Top-line softness
Revenue has been choppy with recent declines and negative revenue growth trends; sustained top-line weakness erodes operating leverage, constrains reinvestment, and can force margin trade-offs. Persistent soft sales in developed markets could limit medium-term earnings growth.
Company-specific headwinds
Severe, company-specific disruptions (major drop in used-barrel revenue and prolonged Canada distribution issues) materially reduce predictable revenue and complicate forecasting. These concentrated hits can persist several quarters and pressure mix, margins, and channel performance.
Margin pressure from costs & mix
Input cost inflation, lower production scale and unfavorable mix (loss of used-barrel sales) create structural margin headwinds. Even with portfolio and A&D benefits, sustained cost and mix pressure could compress gross margins and limit the pace of durable margin expansion.
Brown-Forman B (BF.B) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$11.78B
Dividend Yield3.42%
Average Volume (3M)5.52M
Price to Earnings (P/E)12.1
Beta (1Y)0.58
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 Outstanding294,594,670
10 Day Avg. Volume8,355,096
30 Day Avg. Volume5,517,090
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/Revenue3.58
Enterprise Value/Gross Profit6.01
Enterprise Value/Ebitda11.77
Forecast
1Y Price Target
$27.50Price Target Upside8.87% Upside
Rating ConsensusModerate Sell
Number of Analyst Covering10
EPS Forecast (FY)1.74
Revenue Forecast (FY)$3.89B
Brown-Forman B 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 branded spirits and wines across both domestic and international markets. The company's revenue model is driven by several key streams, including wholesale sales to distributors, retail sales, and direct-to-consumer channels. A significant portion of its income comes from the sale of its flagship brand, Jack Daniel's, which is one of the best-selling American whiskey brands worldwide. Additionally, Brown-Forman benefits from premium pricing strategies and brand loyalty, as its products are positioned in the high-end segment of the market. Strategic partnerships with distributors and retailers enhance its market reach and facilitate promotional activities, while international growth, particularly in emerging markets, contributes significantly to overall sales. The company's focus on innovation and product development, including new flavor offerings and packaging, also plays a vital role in attracting new customers and driving additional revenue.
Brown-Forman B 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 presents a balanced picture: meaningful regional and product-level strengths (double-digit emerging market growth, strong RTD and successful Blackberry innovation), improved cash flow and shareholder returns were offset by sizable, company-specific headwinds (major declines in used barrel sales and Canada distribution), pressured developed markets and near-term margin mix challenges. Management reaffirmed full-year guidance and emphasized strategic initiatives and cost discipline while acknowledging persistent macro uncertainty.Q2-2026 Updates
Positive Updates
Top-line performance (First half FY2026)
Reported net sales declined 4% in the first half of fiscal 2026, while organic net sales were flat after adjusting for acquisition & divestiture (A&D) impacts related to Korbel and Sonoma-Cutrer.
Emerging markets and Travel Retail strength
Emerging international markets delivered double-digit organic net sales growth of 12% (Mexico and Brazil notable drivers) and the Global Travel Retail channel grew 6% with passenger numbers surpassing pre-pandemic levels.
Strong regional brand and RTD performance
New Mix (tequila-based RTD) delivered 18% organic net sales growth in Mexico; Brazil organic net sales grew more than 20%, led by Jack Daniel's Tennessee Apple and Tennessee Whiskey; super-premium brands (Diplomático, Gentleman Jack, Woodford Reserve) delivered double-digit growth in H1.
Successful innovation — Jack Daniel's Tennessee Blackberry
Blackberry launch exceeded expectations in the U.S., driving shipments ahead of depletions; initial international phased launches (U.K., Germany, France, Poland, Czechia, Turkey and GTR) generated strong retail and consumer response, with examples like Tesco (UK) reporting strong new-product performance.
Margin and cash flow improvements
Reported gross margin expanded to 59.5% (gross profit margin expanded 30 bps), driven by a 190 bps A&D benefit; cash flows from operations grew $163 million to $292 million and free cash flow increased $179 million to $236 million.
Capital allocation and shareholder returns
Board approved a 2% increase in quarterly dividend (42nd consecutive yearly increase) and authorized up to $400 million in share repurchases; $99 million repurchased as of Oct 31, 2025.
Operational progress on route-to-consumer and cost structure
U.S. distributor transitions largely complete (improved distributor terms and investment), organic SG&A decreased 4% following workforce restructuring, and full-year capex guidance was reduced to $110–$120 million to reflect completed projects and inventory workdown.
Negative Updates
Headwinds from used barrel sales and Canada trade dispute
Used barrel organic net sales decreased by more than 60% (management cited ~61% decline); Canadian organic net sales declined over 60% as U.S.-produced spirits remain off shelves in most provinces — together these were identified as material negative impacts to top-line performance (more than ~2 points of top-line impact).
Weakness in developed international markets
Developed international markets collectively declined 6% organically in the first half; the U.K. organic net sales declined 13% (tough prior-year comps and weaker consumer spending) and Germany declined 8% with increased promotional activity and softened total distilled spirits trends.
U.S. and total distilled spirits trends pressured
U.S. organic net sales were flat in H1; total distilled spirits (TDS) takeaway trends are down low single-digits, indicating pressured consumer spending and trade-down behavior.
Profitability and EPS contraction
Reported operating income decreased 9% and organic operating income decreased 4% in H1; diluted EPS decreased 13% to $0.83 per share (impact includes a $22 million nonoperating post-retirement expense related to workforce initiatives).
Gross margin headwinds from costs and mix
Gross margin expansion was offset by 110 bps of higher costs (lower production levels, input cost inflation and timing) and 50 bps unfavorable price/mix (strong RTD growth and lower used barrel sales), creating headwinds even as A&D benefits supported margin expansion.
Uncertainty and consumer environment risks
Management highlighted ongoing macroeconomic and geopolitical uncertainties, softer consumer confidence and discretionary spending in the U.S. and developed markets, plus longer-term risks (e.g., potential impacts from medical weight-loss treatments) that could affect consumption patterns.
Transitional disruption and timing
Distributor transitions (U.S. and other markets) took longer than expected in some areas, causing temporary disruption for emerging brands and on-premise listings; some SG&A savings momentum will moderate as prior-period open roles and compensation adjustments are lapped.
Company Guidance
Brown‑Forman reaffirmed its fiscal 2026 guidance, forecasting a low single‑digit decline in organic net sales for the full year, reported gross‑margin expansion (A&D benefits expected to more than offset negative price/mix and higher costs), and organic operating income down in the low single‑digit range; management expects shipments will be roughly in line with depletions for the year. Key quantified assumptions and impacts include an anticipated decline in used barrel sales of more than half versus fiscal 2025 (used barrels were down ~61% in H1), the continued Canada headwind (Canada organic net sales fell >60% in H1 and is assumed to persist), an effective tax rate of ~21%–23%, and a reduced full‑year capex outlook of $110–$120 million (down from $125–$135M). Financial and cash‑flow context provided: H1 reported gross margin was 59.5% (gross profit down 4%), reported operating income fell 9% (organic op income down 4%), diluted EPS was $0.83 (down 13%), cash flow from operations rose to $292M (+$163M) and free cash flow to $236M (+$179M); capital allocation actions include a 2% quarterly dividend increase (42nd consecutive increase) and a board‑authorized $400M buyback program (≈$99M repurchased as of 10/31/25).Brown-Forman B Financial Statement Overview
Summary
Strong profitability (TTM gross margin ~59%, net margin ~21%) and robust free cash flow with good earnings quality support the score. Offsetting factors are uneven recent revenue performance and some cash conversion volatility (OCF to net income ~0.56), which temper overall strength.Income Statement
BF.B shows strong, resilient profitability with TTM (Trailing-Twelve-Months) gross margin around 59% and net margin around 21%, indicating solid brand/price strength. However, growth has turned choppy: revenue declined in the last two annual periods and is still slightly down in TTM versus the latest annual baseline, alongside some margin compression versus FY2024 levels. Overall, earnings power remains high, but the recent top-line softness keeps the score below the upper tier.74
Positive
Balance Sheet
Leverage looks manageable and improving: debt-to-equity has stepped down meaningfully (from roughly ~0.88–0.96 in FY2021–FY2024 to ~0.68 in FY2025 and ~0.59 in TTM), supported by higher equity. Returns on equity remain strong (~20% in TTM, peaking higher in earlier years), but the downshift in ROE from prior highs signals slightly less efficient profitability recently. Net: solid balance sheet with improving leverage, though not ultra-conservative.73
Positive
Cash Flow
Cash generation is a key strength: TTM (Trailing-Twelve-Months) free cash flow is strong and materially higher than the prior annual period, with very strong free cash flow growth. Free cash flow covers a large portion of net income (about ~85% in TTM), indicating good earnings quality. The main watch-out is that operating cash flow is not consistently strong versus accounting earnings (operating cash flow to net income is only ~0.56 in TTM and was weaker in FY2024), suggesting some working-capital or timing volatility.78
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 B Technical Analysis
Negative
25.26
Price Trends
27.70
Negative
27.99
Negative
28.29
Negative
Market Momentum
-0.45
Positive
31.01
Neutral
13.92
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BF.B, the sentiment is Negative. The current price of 25.26 is below the 20-day moving average (MA) of 28.93, below the 50-day MA of 27.70, and below the 200-day MA of 28.29, indicating a bearish trend. The MACD of -0.45 indicates Positive momentum. The RSI at 31.01 is Neutral, neither overbought nor oversold. The STOCH value of 13.92 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for BF.B.
Brown-Forman B Risk Analysis
Brown-Forman B disclosed 24 risk factors in its most recent earnings report. Brown-Forman B 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 B Peers Comparison
UnderperformOutperform
Sector (62)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
68 Neutral | $2.43B | 19.30 | 12.16% | ― | -1.13% | 24.34% | |
67 Neutral | $25.40B | 11.96 | 15.12% | 2.92% | -5.57% | 119.49% | |
63 Neutral | $11.78B | 12.09 | 19.93% | 3.42% | -4.59% | -19.19% | |
62 Neutral | $20.33B | 14.63 | -3.31% | 3.23% | 1.93% | -12.26% | |
60 Neutral | $7.69B | 11.49 | 14.78% | 5.64% | 2.71% | 4.90% | |
60 Neutral | $45.07B | 6.03 | 22.03% | 4.80% | 0.22% | -38.76% | |
54 Neutral | $9.26B | -4.26 | -18.35% | 4.08% | -4.01% | -339.22% |
* Consumer Defensive Sector Average
BF.B
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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.