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Brown-Forman Stock Slips; Profit and Sales Lag Forecasts

Brown-Forman profit totaled 49 cents a share in its latest quarter, trailing the FactSet analyst consensus of 53 cents.
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Brown-Forman  (BF.B) - Get Brown-Forman Corporation Class B Report shares fell on Wednesday after the owner of Jack Daniel’s and Korbel Champagne posted weaker-than-expected results for its latest quarter.

For the fiscal 2022 second quarter ended Oct. 31, net income totaled $236 million, or 49 cents a share, down from $240 million, or 50 cents a share, in the year-earlier quarter. The FactSet analyst consensus called for 53 cents in the latest quarter.

Brown-Forman registered net sales of $994 million, up 1% from $985 million a year earlier but below analysts’ forecast of $1.05 billion.

The Louisville, Ky., company's stock recently traded at $70.19, down 3%, and has slid 12% year to date.

Prior to the earnings report, Morningstar analyst Sean Dunlop put fair value at $72 and assigned Brown-Forman a wide moat.

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He noted Sept. 1 that the company “reported strong sales growth in its fiscal first quarter, with $906 million in net revenue, up 20% from the year-ago period.”

Further, “While the firm benefited from downstream partners building inventory, momentum in premium beverages remains alluring.” To be sure, he noted tepid gross margin guidance.

Overall, “Brown-Forman has established itself as a stalwart in matured spirits, an enclave of the distillation industry that we view as particularly attractive,” Dunlop said.

“In addition to brand recognition and distribution, companies in this industry also benefit from scarcity value, which manifests as a result of the consumer perception surrounding the aging of this type of alcohol, and the pricing power that this begets.

“Against this industry backdrop, we believe Brown-Forman’s portfolio, anchored by the Jack Daniel’s brand, boasts some of the highest cachet globally.”