Brown-Forman Looks to Keep the Whiskey Party Rolling With Earnings

NEW YORK (TheStreet) -- Shares of Brown-Forman (BF.B) -- the Jack Daniels maker scheduled to report its quarterly results on Wednesday -- aren't cheap, but avoiding the stock solely based on price may be a mistake.

The stock trades at 29 times earnings estimates for its fiscal year, compared with a price-to-earnings ratio of 21 for the Standard & Poor's 500 Index (SPY). One reason for the premium price is that Brown-Forman, which ships 14 million 9-liter cases of whiskey to more than 170 countries, has established a dominant leadership position in the industry. Like leading brands in other businesses and industries, the company enjoys a loyal following.

For the company's fiscal fourth quarter ended on April 30, analysts on average expect Brown-Forman to deliver 66 cents in earnings per share on revenue of $922 million, compared with earnings of 62 cents a share on $689 million in revenue a year earlier.

In Brown-Forman's fiscal third quarter, which ended on Jan. 30, Jack Daniels' sales rose 8%. Margins in the company's whiskey business expanded by 1.3 percentage points from a year earlier to almost 51% of revenue, and operating expenses declined 10 basis points to 25.2% of revenue. Combined, that led to an operating margin of 25%.

Besides Jack Daniels, the company produces such popular drinks as Finlandia, Southern Comfort and Canadian Mist. It also produces Sonoma-Cutrer wine and Korbel champagne.

Shares in the company, which was founded by George Garvin Brown in 1870, have risen 6.8% year to date, compared with a gain of 1.2% by the S&P 500.

If you liked this article you might like

This Whiskey Maker Just Did Something It Hasn't Done in Six Years

The Stock Price of the World's Largest Liquor Maker Has Gone Haywire -- Here's What We Know

Jim Cramer -- Curry's Under Armour Shoe Will Be Hot, if Warriors Sweep

Jim Cramer Goes With Constellation Brands Over Brown-Forman ... For Now