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Can Positive Trends Aid Brown-Forman's (BF.B) Q2 Earnings?
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Brown-Forman Corporation (BF.B - Free Report) is slated to release second-quarter fiscal 2024 results on Dec 6. The alcoholic beverage bigwig’s revenues and earnings are expected to have increased in the to-be-reported quarter. The Zacks Consensus Estimate for fiscal second-quarter revenues is pegged at $1.15 billion, indicating growth of 5.5% from that reported in the year-ago quarter.
The consensus mark for the to-be-reported quarter’s earnings is pegged at 50 cents per share, suggesting growth of 6.4% from the year-ago period’s reported number. Earnings estimates for the fiscal second quarter have been unchanged in the past 30 days.
The company delivered a negative earnings surprise of 7.7% in the last reported quarter. In the trailing four quarters, its earnings underperformed the Zacks Consensus Estimate by 6.7%, on average.
Brown-Forman has been witnessing strong sales trends, driven by increased demand for its brands, and growth across all geographic clusters and the Travel Retail channel. This has been driving organic sales growth. Sales have been benefiting from an increase in distributor inventories.
Also, BF.B has been benefiting from the success of its portfolio premiumization strategy, pricing initiatives, revenue growth management strategies and aggressive brand investments. Gains across its premium and super-premium brands have been contributing to its top-line growth.
The company is likely to have witnessed continued growth across brands and categories in the fiscal second quarter. Growth in the tequila categories, mainly Herradura and el Jimado, is expected to have contributed to strong sales in the fiscal second quarter. Sales in the quarter under review are also expected to have gained from the continued consumer interest in flavor and convenience, which boosted the performance of Jack Daniel’s Ready-to-Drink (RTD), Jack Daniel’s Tennessee Honey and Jack Daniel’s Tennessee Fire.
On the last reported quarter’s earnings call, management expected strength in its brand portfolio, strong consumer demand and the return of inventories to more normalized levels to aid organic sales growth throughout fiscal 2024. The persistence of these trends is likely to have aided the company’s performance in the fiscal second quarter.
Our model predicts the tequila category to register sales growth of 2.2% in the fiscal second quarter. Meanwhile, other key categories, including wine, vodka, ready-to-drink and whiskey, are likely to report sales growth of 4.7%, 15.6%, 16.3% and 4.7%, respectively.
BF.B has also been on track with its pricing strategy, which aims to increase prices year over year to grow sales as part of its revenue growth management initiatives. Gains from improved pricing are likely to get reflected in the company’s top-line performance in the to-be-reported quarter.
However, Brown-Forman has been witnessing several headwinds, including higher input costs due to inflation, rising advertising expenses due to investments in its brands, and the significant impacts of negative foreign exchange and Russia’s invasion of Ukraine.
On the last reported quarter’s earnings call, management expected inflation to continue affecting input costs throughout fiscal 2024. Higher inflation is expected to have a meaningful impact on the gross margin in the to-be-reported quarter.
The company has also been witnessing higher advertising expenses due to continued investments in its brands. This is likely to have partly dented margins and the bottom line in the to-be-reported quarter. Higher compensation expenses, rising discretionary spending, and acquisition and integration costs for the Gin Mare and Diplomatico brands are expected to have led to higher SG&A expenses in the fiscal second quarter.
We expect total operating expenses to increase 11.3% year over year to $333.8 million in the fiscal second quarter, driven by a 2.9% rise in advertising expenses, and an 11.6% increase in selling, general and administrative expenses.
Our model predicts an operating margin of 29.3%, suggesting a 70-bps expansion from the year-ago quarter’s actual.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Brown-Forman this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Brown-Forman has an Earnings ESP of +2.81% and a Zacks Rank #4 (Sell) at present.
Stocks With Favorable Combinations
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:
Ollie's Bargain Outlet (OLLI - Free Report) currently has an Earnings ESP of +0.29% and a Zacks Rank #2. The company is anticipated to register top and bottom-line growth in third-quarter fiscal 2023. The Zacks Consensus Estimate for OLLI’s quarterly revenues is pegged at $468.8 million, suggesting growth of 12.1% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Ollie's quarterly earnings moved up by a penny in the last seven days to 44 cents per share, suggesting 18.9% growth from the year-ago quarter's reported number. OLLI delivered an earnings surprise of 1.3%, on average, in the trailing four quarters.
Campbell Soup (CPB - Free Report) currently has an Earnings ESP of +0.07% and a Zacks Rank #3. The company is expected to register top and bottom-line declines when it reports first-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for CPB’s quarterly earnings was unchanged in the last 30 days at 87 cents per share, suggesting a decline of 14.7% from the year-ago quarter's reported number.
The Zacks Consensus Estimate for Campbell Soup’s quarterly revenues is pegged at $2.5 billion, which suggests a decline of 2.7% from the figure reported in the prior-year quarter. CPB delivered an earnings surprise of 8.6%, on average, in the trailing four quarters.
lululemon athletica (LULU - Free Report) currently has an Earnings ESP of +0.19% and a Zacks Rank of 3. The company is expected to register top and bottom-line growth when it reports third-quarter fiscal 2023 results. The Zacks Consensus Estimate for LULU’s quarterly revenues is pegged at $2.2 billion, which suggests growth of 17.8% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for lululemon’s bottom line was unchanged in the last 30 days at $2.27 per share, which suggests growth of 13.5% from the figure reported in the prior-year quarter. LULU has delivered an earnings surprise of 6.8%, on average, in the trailing four quarters.
Image: Bigstock
Can Positive Trends Aid Brown-Forman's (BF.B) Q2 Earnings?
Brown-Forman Corporation (BF.B - Free Report) is slated to release second-quarter fiscal 2024 results on Dec 6. The alcoholic beverage bigwig’s revenues and earnings are expected to have increased in the to-be-reported quarter. The Zacks Consensus Estimate for fiscal second-quarter revenues is pegged at $1.15 billion, indicating growth of 5.5% from that reported in the year-ago quarter.
The consensus mark for the to-be-reported quarter’s earnings is pegged at 50 cents per share, suggesting growth of 6.4% from the year-ago period’s reported number. Earnings estimates for the fiscal second quarter have been unchanged in the past 30 days.
The company delivered a negative earnings surprise of 7.7% in the last reported quarter. In the trailing four quarters, its earnings underperformed the Zacks Consensus Estimate by 6.7%, on average.
Brown-Forman Corporation Price and EPS Surprise
Brown-Forman Corporation price-eps-surprise | Brown-Forman Corporation Quote
Key Factors to Note
Brown-Forman has been witnessing strong sales trends, driven by increased demand for its brands, and growth across all geographic clusters and the Travel Retail channel. This has been driving organic sales growth. Sales have been benefiting from an increase in distributor inventories.
Also, BF.B has been benefiting from the success of its portfolio premiumization strategy, pricing initiatives, revenue growth management strategies and aggressive brand investments. Gains across its premium and super-premium brands have been contributing to its top-line growth.
The company is likely to have witnessed continued growth across brands and categories in the fiscal second quarter. Growth in the tequila categories, mainly Herradura and el Jimado, is expected to have contributed to strong sales in the fiscal second quarter. Sales in the quarter under review are also expected to have gained from the continued consumer interest in flavor and convenience, which boosted the performance of Jack Daniel’s Ready-to-Drink (RTD), Jack Daniel’s Tennessee Honey and Jack Daniel’s Tennessee Fire.
On the last reported quarter’s earnings call, management expected strength in its brand portfolio, strong consumer demand and the return of inventories to more normalized levels to aid organic sales growth throughout fiscal 2024. The persistence of these trends is likely to have aided the company’s performance in the fiscal second quarter.
Our model predicts the tequila category to register sales growth of 2.2% in the fiscal second quarter. Meanwhile, other key categories, including wine, vodka, ready-to-drink and whiskey, are likely to report sales growth of 4.7%, 15.6%, 16.3% and 4.7%, respectively.
BF.B has also been on track with its pricing strategy, which aims to increase prices year over year to grow sales as part of its revenue growth management initiatives. Gains from improved pricing are likely to get reflected in the company’s top-line performance in the to-be-reported quarter.
However, Brown-Forman has been witnessing several headwinds, including higher input costs due to inflation, rising advertising expenses due to investments in its brands, and the significant impacts of negative foreign exchange and Russia’s invasion of Ukraine.
On the last reported quarter’s earnings call, management expected inflation to continue affecting input costs throughout fiscal 2024. Higher inflation is expected to have a meaningful impact on the gross margin in the to-be-reported quarter.
The company has also been witnessing higher advertising expenses due to continued investments in its brands. This is likely to have partly dented margins and the bottom line in the to-be-reported quarter. Higher compensation expenses, rising discretionary spending, and acquisition and integration costs for the Gin Mare and Diplomatico brands are expected to have led to higher SG&A expenses in the fiscal second quarter.
We expect total operating expenses to increase 11.3% year over year to $333.8 million in the fiscal second quarter, driven by a 2.9% rise in advertising expenses, and an 11.6% increase in selling, general and administrative expenses.
Our model predicts an operating margin of 29.3%, suggesting a 70-bps expansion from the year-ago quarter’s actual.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Brown-Forman this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Brown-Forman has an Earnings ESP of +2.81% and a Zacks Rank #4 (Sell) at present.
Stocks With Favorable Combinations
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:
Ollie's Bargain Outlet (OLLI - Free Report) currently has an Earnings ESP of +0.29% and a Zacks Rank #2. The company is anticipated to register top and bottom-line growth in third-quarter fiscal 2023. The Zacks Consensus Estimate for OLLI’s quarterly revenues is pegged at $468.8 million, suggesting growth of 12.1% from the figure reported in the prior-year quarter.
You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Ollie's quarterly earnings moved up by a penny in the last seven days to 44 cents per share, suggesting 18.9% growth from the year-ago quarter's reported number. OLLI delivered an earnings surprise of 1.3%, on average, in the trailing four quarters.
Campbell Soup (CPB - Free Report) currently has an Earnings ESP of +0.07% and a Zacks Rank #3. The company is expected to register top and bottom-line declines when it reports first-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for CPB’s quarterly earnings was unchanged in the last 30 days at 87 cents per share, suggesting a decline of 14.7% from the year-ago quarter's reported number.
The Zacks Consensus Estimate for Campbell Soup’s quarterly revenues is pegged at $2.5 billion, which suggests a decline of 2.7% from the figure reported in the prior-year quarter. CPB delivered an earnings surprise of 8.6%, on average, in the trailing four quarters.
lululemon athletica (LULU - Free Report) currently has an Earnings ESP of +0.19% and a Zacks Rank of 3. The company is expected to register top and bottom-line growth when it reports third-quarter fiscal 2023 results. The Zacks Consensus Estimate for LULU’s quarterly revenues is pegged at $2.2 billion, which suggests growth of 17.8% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for lululemon’s bottom line was unchanged in the last 30 days at $2.27 per share, which suggests growth of 13.5% from the figure reported in the prior-year quarter. LULU has delivered an earnings surprise of 6.8%, on average, in the trailing four quarters.
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