Factors Likely to Deter Brown-Forman's (BF.B) Earnings in Q4
Brown-Forman Corporation BF.B is slated to release fourth-quarter fiscal 2020 results on Jun 9. This alcoholic beverage bigwig delivered a negative earnings surprise of 4% in the last reported quarter. However, the company’s earnings outperformed the Zacks Consensus Estimate by 6.6%, on average, in the trailing four quarters.
The Zacks Consensus Estimate for fiscal fourth-quarter earnings has been unchanged over the past 30 days at 28 cents. This suggests a decline of 15.2% from the year-ago period’s reported figure. Further, the consensus mark for revenues is pegged at $728.6 million, indicating a fall of 2.1% from the figure reported in the year-ago quarter.
For fiscal 2020, the consensus mark for revenues is pegged at $3.38 billion, with earnings of $1.74 per share.
BrownForman Corporation Price and EPS Surprise
BrownForman Corporation price-eps-surprise | BrownForman Corporation Quote
Key Factors to Note
In the wake of the coronavirus outbreak, on Mar 16, Brown-Forman revealed that it was postponing all tours and closing tastings as well as retail shops in all cooperage, distillery and winery locations. The move aimed at safeguarding employees and customers from the ongoing coronavirus pandemic and it shall remain valid until the outbreak subsides.
Moreover, on its fiscal third-quarter earnings call, the company anticipated the uncertain global economic environment due to the coronavirus outbreak to have a material impact on its fiscal 2020, which also indicated that the softness will persist in the fiscal fourth quarter. Consequently, it lowered the view for fiscal 2020. Further, the company predicted short-term disruptions in international markets to mar results in the fiscal year, which includes the fourth quarter.
The revised view also includes the impacts of the COVID-19 pandemic on its global business, including its Travel Retail business in Asia. For fiscal 2020, the company now expects low-single-digit underlying sales growth. It expects underlying operating margin to be flat to decline modestly. Further, earnings per share are envisioned to be $1.75-$1.80. Higher costs are also likely to weigh on gross margin in the fiscal year.
However, the company has been delivering strong underlying sales growth, driven by broad-based growth across its brand portfolio and geographies, particularly with strength in the United States — its largest market. Moreover, it is confident of capitalizing on its American Whiskey strategy and benefitting from investments in its brand portfolio.
What the Zacks Model Unveils
Our proven model doesn’t 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.
Although Brown-Forman carries a Zacks Rank #3, its Earnings ESP of 0.00% makes surprise prediction difficult.
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:
The J. M. Smucker Company SJM has an Earnings ESP of +1.10% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Caseys General Stores, Inc. CASY currently has an Earnings ESP of +40.82% and a Zacks Rank #3.
Chicos FAS, Inc. CHS has an Earnings ESP of +67.74% and a Zacks Rank #3 at present.
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