Brown-Forman (BF.B) Q3 Earnings: Is Beat In Store Again?

Brown-Forman Corporation BF.B is set to report third-quarter fiscal 2018 results on Mar 7, before the market opens. In the last quarter, the company delivered a positive earnings surprise of nearly 17%.

In fact, this leading producer and distributor of premium alcoholic beverages delivered a positive earnings surprise of 7% in the trailing four quarters.

What to Expect?

The question lingering in investors’ minds now is whether Brown-Forman will be able to post positive earnings surprise in the quarter to be reported. The Zacks Consensus Estimate for the quarter under review is 41 cents per share, reflecting a growth of 7.9% from the year-ago quarter. We note that the Zacks Consensus Estimate for the quarter has been stable in the last 30 days. Analysts polled by Zacks anticipate revenues of $872.3 million, up nearly 8% from the year-ago quarter.

Moreover, we note that the stock has outperformed the industry in the last three months. The company’s shares moved up 6.6%, while the industry declined 8.7%.

Factors at Play

Brown-Forman’s strong performance can be attributed to its strong brand portfolio, efforts to expand globally, strategic initiatives and a robust outlook. Additionally, the company is poised to gain from the industry growth trends.

The company gains strength from its strong portfolio of premium American whiskey brands along with its Jack Daniel's trademark. Brown-Forman anticipates growing on the back of strong demand for its authentic American whiskey brands worldwide, consumer interest in flavored whiskey and a growing trend in premium spirits. Its consistent focus on pricing, product innovation and expansion reinforce its market position.

Driven by a spectacular second-quarter performance and expectations of continued growth in the second half of 2018, Brown-Forman raised its guidance for fiscal 2018. The company now anticipates 6-7% growth in underlying sales compared with 4-5% projected earlier. Additionally, earnings per share are estimated in the range of $1.90-$1.98 versus the previous guidance of $1.85-$1.95. Furthermore, the company expects to gain from the benefits of the new tax reform.

Additionally, Brown-Forman is confident of growth at its premium American whiskey and tequila brands. It also expects to gain from new product launches including Jack Daniel's Tennessee Rye and Slane Irish Whiskey.

However, the company anticipates a volatile global economic situation, mainly in emerging markets, and intense competition in developed economies to hinder results.

What Does the Zacks Model Unveil

Our proven model does not conclusively show that Brown-Forman is going to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. 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 0.00%. Although the company has a Zacks Rank #3, which increases the predictive power of ESP, we need to have a positive ESP in order to be confident about earnings surprise.

Stocks Poised to Beat Earnings Estimates

Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

American Eagle Outfitters Inc. (NYSE:AEO) has an Earnings ESP of +0.53% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ross Stores, Inc. (NASDAQ:ROST) has an Earnings ESP of +1.37% and a Zacks Rank #2.

Dollar Tree, Inc. (NASDAQ:DLTR) has an Earnings ESP of +1.41% and a Zacks Rank #2.

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Brown-Forman Corportaion (BF.B): Free Stock Analysis Report

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Ross Stores, Inc. (ROST): Free Stock Analysis Report

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