Brown-Forman Corporation (NYSE: BF.B) is
engaged in the manufacture, bottling and marketing of alcoholic beverages. It provides whiskies, bourbons, wines, tequila, liqueurs, vodka, rum, gin and ready-to-drink products, under a variety of well-known brand names. Spirit products include Jack Daniel's, Canadian Mist, Early Times and Southern Comfort. Wine labels include Bolla, Fetzer, Bel Arbor and Five Rivers. The company's beverages are sold in more than 130 countries. Diageo (NYSE: DEO) and Constellation Brands (NYSE: STZ) are major competitors.
The firm pleased investors last week, when it reported Q4 EPS of 81 cents and revenues of $772.3 million. Analysts had been looking for 69 cents and $751.2 million. Management also guided FY09 EPS to $3.73-$3.98 ($3.84 consensus). The outlook incorporated expectations for continued international growth and anticipated increases in fuel and raw material costs.
BF.B shares
popped on the news and have since been defining a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the issue with one "strong buy", two "buys", two "holds" and three "underperforms". The BF.B EPS Growth rate (22.73%), Operating Margin (20.87%), Net Profit Margin (13.39%), Return on Assets (12.63%), Return on Investment (19.00%) and Return on Equity (26.65%) compare favorably with industry, sector and S&P 500 averages. The stock is one of those used to calculate the S&P 500 Index. Over the past 52 weeks, it has traded between $61.35 and $79.88. A stop-loss of $66.40 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in either of the stocks mentioned above.
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