The firm said it lowered its rating on the company, which manufacturers, bottles, markets, and sells a variety of alcoholic beverage brands, based on a valuation call.
Deutsche set a $99 price target on Brown-Forman.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
Separately, TheStreet Ratings team rates BROWN-FORMAN as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate BROWN-FORMAN (BF.B) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- BROWN-FORMAN has improved earnings per share by 19.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, BROWN-FORMAN increased its bottom line by earning $3.06 versus $2.74 in the prior year. This year, the market expects an improvement in earnings ($3.35 versus $3.06).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Beverages industry average. The net income increased by 17.7% when compared to the same quarter one year prior, going from $113.00 million to $133.00 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 4.5%. Since the same quarter one year prior, revenues slightly increased by 4.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The current debt-to-equity ratio, 0.49, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, BF.B has a quick ratio of 1.79, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for BROWN-FORMAN is currently very high, coming in at 73.58%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 19.30% is above that of the industry average.
- You can view the full analysis from the report here: BF.B Ratings Report
EXCLUSIVE OFFER:See inside Jim Cramer's multi-million dollar charitable trust portfolio to see thestockshe and Stephanie Link think could be potentially HUGE winners.Click here to see the holdings for FREE