Brown-Forman Beats, Ups View - Analyst Blog
March 06 2013 - 8:08AM
Zacks
Brown-Forman Corporation’s (BF.B) fiscal third
quarter 2013 (ended Jan 31, 2013) earnings of 73 cents a share came
in ahead of the Zacks Consensus Estimate of 70 cents. Moreover,
earnings jumped 18% from 62 cents reported in the year-ago
quarter.
Net sales increased 7% year over year to $1,026.9 million
primarily due to strong demand of North American whiskeys. The
year-over-year increase in sales benefited from favorable currency
exchange rate, which was partially offset by negative impact from
the spin-off of Hopland wine business.
On an underlying basis, the company’s net sales increased 8%.
Moreover, the quarterly sales were well above the Zacks Consensus
Estimate of $740.0 million.
During the quarter, Brown-Forman’s gross profit increased 12% to
$506.7 million from $450.9 million reported in the year-ago
quarter. Gross margin expanded 230 basis points (bps) to 49.3%
compared with 47.0% in the prior-year period, primarily due to
lower input cost and excise taxes as a percentage of sales.
Selling, general and administrative expenses (SG&A)
increased 10% from the year-ago quarter to $162.4, while SG&A
as a percentage of sales expanded 40 basis points to 15.8%.
Advertising expenses surged 12% to $110.5 million.
Operating profit during the quarter climbed 15% to $237.0
million from $206.2 million in the prior-year period, primarily
driven by improved gross profit, partially offset by increased
SG&A and advertising expenses. Consequently, operating margin
expanded 160 bps to 23.1% compared with 21.5% in the year-ago
quarter.
Balance Sheet & Cash Flow
Brown-Forman, which has a Zacks Rank #4 (Sell), ended the
quarter with cash and cash equivalents of $386.8 million and
long-term debt of $996.6 million. Year-to-date, Brown-Forman
generated $367.2 million of cash from operations and deployed
$1,008.0 million toward dividend payout.
Guidance Raised
Moving forward, Brown-Forman raised and narrowed its outlook for
fiscal 2013. Currently, it expects fiscal 2013 earnings in the
range of $2.60–$2.68 per share, against the earlier guidance of
$2.58–$2.70.
Moreover, the company continues to expect operating income to
grow in the low-double-digits range, while underlying sales are
expected to increase in the high-single-digit range.
Other Stocks to Consider
Other stocks worth considering in the beverages-alcohol industry
are Diageo Plc (DEO), Grupo Modelo, S.A.B.
de C.V. (GPMCF) and Molson Coors Brewing
Company (TAP). All these stocks hold a Zacks Rank #2
(Buy).
BROWN FORMAN B (BF.B): Free Stock Analysis Report
DIAGEO PLC-ADR (DEO): Free Stock Analysis Report
GRUPO MODELO-C (GPMCF): Get Free Report
MOLSON COORS-B (TAP): Free Stock Analysis Report
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