Brown-Forman Misses Estimate - Analyst Blog
August 31 2011 - 6:29AM
Zacks
Brown-Forman Corp.(BF.B) recorded fiscal 2012
first-quarter earnings of 81 cents a share compared with 76 cents a
share in the year-ago quarter. However, earnings missed the Zacks
Consensus Estimate of 83 cents a share. The robust increase in
quarterly earnings was primarily driven by strong top-line growth
and strong volume growth.
Quarterly Details
Brown-Forman's net sales recorded a growth of 13.0% to $840.3
million from $744.9 million in the prior-year quarter. The growth
was primarily attributable to solid performance in Germany, Turkey,
the U.K., Russia, and Brazil more than offset declines in Poland,
Spain, and Australia. Total Revenue beat the Zacks Consensus
Estimate of $769 million.
During the quarter, Brown-Forman's gross profit grew 11.0% from
the prior-year quarter to $378.8 million, while gross margin
decreased 90 basis points (bps) year over year to 50.0%.
Advertising expense fell 19.0% year over year to $76.3 million.
Selling, general and administrative expenses inched up 5.0% year
over year to $139.0 million. Conversely, Brown-Forman's operating
profit surged 8% from the prior-year quarter to $185.9 million,
while operating margin contracted 100 times to 22.0% from the
prior-year period.
Balance Sheet & Cash Flow
Brown-Forman ended the quarter with cash and cash equivalents of
$552.5 million and long-term debt of $505.1 million compared with
$567.1 million and $504.5 million in the prior-year quarter,
respectively.
In the quarter, Brown-Forman generated $64 million of cash from
operations and deployed $46.4 million for dividend payout, and $6.2
million on capital expenditures. The company repurchased up to
$15.0 million of Class A and Class B shares, out of $250.0 million
share repurchase program which expires on November 30, 2011.
Dividend
During the quarter, Brown-Forman paid a regular quarterly cash
dividend of 32 cents a share on Class A and Class B common
stock.
Guidance and Zacks Consensus
Moving forward, Brown-Forman anticipates moderate improvement in
global economic conditions and customer trends in fiscal 2012.
Accordingly, the company has delivered its earnings guidance in the
range of $3.45 to $3.85 per share.
Brown-Forman, which competes with Constellation Brands
Inc. (STZ) and Diageo plc (DEO),
currently holds a Zacks #2 Rank, implying a short-term Buy rating
on the stock. Besides, the company retains a long-term 'Outperform'
recommendation on the stock
BROWN FORMAN B (BF.B): Free Stock Analysis Report
DIAGEO PLC-ADR (DEO): Free Stock Analysis Report
CONSTELLATN BRD (STZ): Free Stock Analysis Report
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