Stock of the Day

October 1, 2019

Brown-Forman (BF.B)

$32.04
+$1.06 (+3.4%)
Market Cap: $14.64B

About Brown-Forman

Brown-Forman Corporation, together with its subsidiaries, manufactures, distills, bottles, imports, exports, markets, and sells various alcoholic beverages. It provides spirits, wines, whiskey spirits, whiskey-based flavored liqueurs, ready-to-drink and ready-to-pour products, ready-to-drink cocktails, vodkas, tequilas, champagnes, brandy, bourbons, and liqueurs. The company offers its products primarily under the Jack Daniel's, Woodford Reserve, Old Forester, Coopers' Craft, Herradura, el Jimador, New Mix, Korbel, Sonoma-Cutrer, Finlandia, GlenDronach, Benriach, Glenglassaugh, Chambord, Slane, and Fords Gin brands. It is also involved in the sale of used barrels, bulk whiskey, and wine; and provision of contract bottling services. The company serves retail customers and consumers through distributors or state governments; and retailers, wholesalers, and provincial governments directly. It has operations in the United States, Germany, Australia, the United Kingdom, Mexico, and internationally. The company was founded in 1870 and is headquartered in Louisville, Kentucky.

Brown-Forman Bull Case

Here are some ways that investors could benefit from investing in Brown-Forman Co.:

  • Brown-Forman Co. has a strong portfolio of well-known brands, including Jack Daniel's and Woodford Reserve, which have shown consistent demand and brand loyalty, contributing to stable revenue growth.
  • The company has demonstrated resilience in the face of economic fluctuations, maintaining profitability and a solid market position in the alcoholic beverages industry.
  • As of now, the stock price of BF.B is performing well, reflecting positive investor sentiment and confidence in the company's future growth prospects.
  • Brown-Forman Co. has a history of returning value to shareholders through dividends, which can provide a steady income stream for investors.
  • The company is expanding its international presence, particularly in emerging markets, which could lead to increased sales and market share in the future.

Brown-Forman Bear Case

Investors should be bearish about investing in Brown-Forman Co. for these reasons:

  • Increased competition in the alcoholic beverages market could pressure margins and market share, particularly from new entrants and craft brands.
  • Regulatory changes and taxation on alcoholic beverages can impact profitability and operational flexibility, posing risks to future earnings.
  • Fluctuations in raw material costs, such as grains and glass, can affect production costs and profit margins, making financial performance less predictable.
  • Economic downturns can lead to reduced consumer spending on premium alcoholic beverages, which may negatively impact sales for Brown-Forman Co.
  • The company's reliance on a few key brands for a significant portion of its revenue could pose risks if consumer preferences shift away from those products.