Fact based stock research
Brown-Forman (NYSE:BF.B)

US1156372096

How to read the ranks

For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".

Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".

Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.

Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.

(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).

(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.

Brown-Forman stock research in summary

brown-forman.com

ANALYSIS: With an Obermatt Combined Rank of 17 (worse than 83% compared with investment alternatives), Brown-Forman (Distillers & Vintners, USA) shares have lower financial characteristics compared with similar stocks. Shares of Brown-Forman are low in value (priced high) with a consolidated Value Rank of 14 (worse than 86% of alternatives) and show below-average growth (Growth Rank of 27) but are safely financed (Safety Rank of 67), which means low debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 17, is a sell recommendation based on Brown-Forman's financial characteristics. As the company Brown-Forman's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 14) and low growth (Obermatt Growth Rank of 27), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. In this case, good financing practices (Obermatt Safety Rank of 67) are a positive sign, because it may allow the company to weather challenging times until the hoped-for cash flows materialize. This may be true for high-tech or biotechnology companies with enough cash to sustain prolonged business development. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and unattractive today. In such cases, the Obermatt Method has limited value, as it is based on facts we can observe today. If the facts lie all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that account for a small fraction of a safe portfolio. Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more

Latest Obermatt Ranks


360° View^new
Sentiment Rank^new
Value Rank	14
Growth Rank	27
Safety Rank	67
Combined Rank	17

Country	USA
Industry	Distillers & Vintners
Index	Energy Efficient, S&P US Consumer, S&P US Food & Beverage, S&P 500
Size class	X-Large

This stock has achievements: Top 10 Stock.

18-Apr-2024. Stock data may be delayed. Log in or sign up to get the most recent research.

Further information

Multiple opinions. One number.

Analysts rarely agree on a stock’s future. So, who do you believe? Obermatt translates those collective views into a single Sentiment Rank. That plus the financial ranks give you the ultimate 360° View. Sign up to access them.

Why popular stocks have low ratings

It’s easier said than done. When your stock drops, it’s easy to want to sell it and find a better performer. Think twice, or even three times, before trading. Those fees (especially the hidden ones) can eat up your gains.

Review the performance ranks of the individual metrics that form each investment strategy.

Research History: Brown-Forman

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	33	9	16	14
GROWTH
GROWTH	8	23	51	27
SAFETY
SAFETY	38	61	65	67
SENTIMENT
SENTIMENT	n/a	30	16	^new
360° VIEW
360° VIEW	n/a	9	16	^new

Most recent update of the stock research: 18-Apr-2024. Financial reporting date used for calculating ranks: 31-Dec-2023. Stock research history is based on the Obermatt Method. The higher the rank, the better Brown-Forman is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	33	9	16	14
GROWTH
GROWTH	8	23	51	27
SAFETY
SAFETY	38	61	65	67
COMBINED
COMBINED	11	14	39	17

Last update of combined financial performance: 18-Apr-2024. Stock analysis on combined financial performance: The higher the rank of Brown-Forman the better the performance.

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 14 (worse than 86% compared with alternatives), Brown-Forman shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with all four indicators below average for Brown-Forman. Price-to-Sales is 7 which means that the stock price compared with what market professionals expect for future profits is higher than 93% of comparable companies, indicating a low value concerning Brown-Forman's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Price-to-Book Rank of 14, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of Brown-Forman. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 18 and Dividend Yield, which is lower than 51% of comparable companies, also make the stock more expensive compared with investment alternatives. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 14, is a sell recommendation based on Brown-Forman's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for Brown-Forman? One reason may be that the company is simply too popular. If enough people want a particular stock, its price can exceed reasonable levels. This is often the case for companies offering new and exciting products and everybody wants a piece of the action. Should you pay a lot for a hot stock such as Brown-Forman? It's risky, and even if the stock price continues to grow because of popular demand, it may return to more typical lower levels later. And that return can be sudden and quick, making it impossible for retail investors to exit on time. Sometimes, high prices are deserved. This is the case when it is justified to believe that the company will dominate a market with high profit margins. It has happened in the past for many technology companies and indeed for commercially successful pharmaceutical discoveries. Sometimes they last, sometimes, they get eaten alive. Brown-Forman may be such a type of stock. That would mean, retail investors should be careful, only considering investing a small part of their wealth in this exciting category and always being ready to lose more than half, if not all of the investment. We recommend further analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks, including the 360° View, before making an investment decision, which is essential in this case, as the financial indicators are inconclusive. ...read more

VALUE METRICS	2021	2022	2023	2024
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	29	1	5	7
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	43	7	14	18
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	12	17	14	14
DIVIDEND YIELD
DIVIDEND YIELD	56	45	52	49
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	33	9	16	14

Last update of Value Rank: 18-Apr-2024. Stock analysis on value ratios: The higher the rank, the lower the value ratio of Brown-Forman; except for dividend yield where the rank is higher, the higher the yield.

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 27 (better than 27% compared with alternatives), Brown-Forman shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with three out of four metrics below average for Brown-Forman. While Profit Growth has a good rank of 65, as professionals currently expect the company to grow its profits more than 65% of its competitors, all other growth indicators are below market averages. Sales Growth has a rank of 21, which means that currently professionals expect the company to grow less than 79% of its competitors, while Capital Growth has a rank of 41 and Stock Returns have been below market median, with a rank of 29 (71% of alternative investments were better). ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 27, is a hold recommendation for growth and momentum investors. While revenue growth and capital growth are good growth momentum indicators, profit is less reliable, because profits may increase due to cost-cutting measures which typically indicate negative growth momentum. "You can save a dollar only once" is the saying about such situations. Growth Investors should look at company priorities closely if they are interested in growth, because the increase in profits is not usually an indicator of growth, and stock prices have been below market, too. While momentum is a popular investment factor, the value aspect might be the more important one, in the longer term. We recommend analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks to arrive at a 360° View of the stock purchase case, especially since the growth performance is limited here. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	28	56	59	21
PROFIT GROWTH
PROFIT GROWTH	47	44	59	65
CAPITAL GROWTH
CAPITAL GROWTH	n/a	34	41	41
STOCK RETURNS
STOCK RETURNS	10	27	39	29
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	8	23	51	27

Last update of Growth Rank: 18-Apr-2024. Stock analysis on growth metrics: The higher the rank, the higher the growth and returns of Brown-Forman.

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 67 (better than 67% compared with alternatives), the company Brown-Forman has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of Brown-Forman is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above-average for Brown-Forman. Refinancing is at 57, meaning the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 57% of its competitors. Liquidity is also good at 77, meaning the company generates more profit to service its debt than 77% of its competitors. This indicates that the company is safer when it comes to debt service. However, Leverage is rather large at 42, which means the company has an above-average debt-to-equity ratio. It has more debt than 58% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 67 (better than 67% compared with alternatives), Brown-Forman has a financing structure that is safer than that of its competitors. This is not bad if things go well. The higher debt level means better returns to shareholders if things go well. Many top-performing companies operate with higher debt levels, and Brown-Forman could be in that group. But if you expect the environment to turn rougher, the higher leverage could become a problem. The same is valid if you expect interest rates to rise. That could squeeze shareholder returns, which so far have benefitted from better conditions. In the long-term, investors may have a debt challenge with Brown-Forman and should also compare Obermatt’s Value, Growth, and Sentiment Ranks before making a decision. ...read more

SAFETY METRICS	2021	2022	2023	2024
LEVERAGE
LEVERAGE	40	28	38	42
REFINANCING
REFINANCING	54	63	57	57
LIQUIDITY
LIQUIDITY	44	81	77	77
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	38	61	65	67

Last update of Safety Rank: 18-Apr-2024. Stock analysis on safety metrics: The higher the rank, the lower the leverage of Brown-Forman and the more cash is available to service its debt.

Sentiment Metrics in Detail

SENTIMENT	2021	2022	2023	2024
ANALYST OPINIONS
ANALYST OPINIONS	n/a	9	19	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	50	45	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	50	18	^new
MARKET PULSE
MARKET PULSE	n/a	68	75	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	30	16	^new

Last update of Sentiment Rank: 18-Apr-2024. Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for Brown-Forman.
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