NEW YORK (TheStreet) -- Walk into any spirits establishment and it's tough to ignore the prominent placement of Jack Daniels, the popular whiskey brand. The name behind this brand? Brown-Forman (BF.A) .
That name may not resonate with consumers, but investors appreciate the company for its rising stock price over the past two years and its reliable dividend. Results have been buoyed by sales of Jack Daniels, which have climbed roughly 75% in the past decade. Global whiskey sales are still on the rise, which should help the company going forward.
Founded by George Garvin Brown in 1870, Brown-Forman is more than just a premium whiskey maker. Although Jack Daniels remains its signature brand, the Louisville, Ky.-based company also owns Finlandia, Southern Comfort and Canadian Mist. And on the softer side, it owns wine products such as Sonoma-Cutrer and Korbel champagne.
Make no mistake, however. With worldwide whiskey sales exceeding those of other spirits, Jack Daniels is still Brown-Forman's most important product. In the nine months ended Jan. 31, Jack Daniels' revenue climbed 8% above the same period a year earlier. The company also reported revenue for its third fiscal quarter, ended Jan. 31, of $1.09 billion, topping last year's mark by 1.0%.
Brown-Forman is well positioned to continue to grow sales of Jack Daniels, given that the company now ships jack Daniels to more than 170 countries. Brown-Forman does appear to be feeling any pricing pressure, despite competitive threats from rivals such as Diageo (DEO) - Get Diageo plc Sponsored ADR Report, the owner of Johnnie Walker. Brown-Forman's fiscal third-quarter profit was 87 cents per share, up 6% from one year ago.
Brown-Forman is also a cash-flow producer. Helped by a 130-basis point expansion in gross margins, the company ended the quarter with $250 million in cash.
This means that for the nine months ended January 2015, underlying (adjusted for currency impacts) operating income and EPS have climbed 7% and 4%, respectively, above last year. At the same time, Jack Daniels' revenue has already climbed 8% above last year -- just in the first nine months. This is especially important because Jack Daniels-related products account for a cumulative 64% of Brown-Forman's depletions in the first nine months of fiscal 2015.
Depletions, a commonly watched metric in the industry, refer to the volume of beverages shipped directly to retailers. It's also a measure of shipments to wholesalers and retail customers from Brown-Forman's distributors. In other words, it's a gauge of consumer demand for its products.
Brown-Forman shipped 14 million 9-liter cases of Jack Daniels as of the most recent quarter. As noted, Brown-Forman is well diversified. Underlying revenue of Woodford Reserve's family of brands and Jack Daniel's Tennessee Honey brand climbed 32% above last year.
All told, with whiskey sales still on the rise, topping $22 billion in 2014, according to the Distilled Spirits Council, Brown-Forman will remain a beneficiary of that growth. And with shares down more than 2% in the past six months, investors looking for a market leader in a growing category should consider this name. Shares were changing hands up $37 cents, or 0.4%, at $89.66 Monday morning.
The average price target of analysts covering the stock is $99, which implies an 11% gain from recent levels. Meanwhile, the company's 35-cent quarterly dividend, yielding 1.41%, suggests excellent value.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.