Is Now the Time to Buy Brown-Forman Corporation Stock?
Image source: Brown-Forman Company.
Shares ofBrown-Forman Corporation (NYSE: BF-B) (NYSE: BF-A), the maker of Jack Daniel's, have been on a roller-coaster ride of volatility this past year. Given the solid fundamentals of the company and its powerful brand, should investors take advantage of future stock price dips?
A whiskey barrel of volatilityIn the company's third-quarter earnings press release, CEO Paul Varga said that the company was facing "deteriorating economic conditions in emerging markets, weakness in the global travel retail channel, and headwinds from a strengthening dollar."
The markets of Poland, Russia, Southeast Asia, and Africa all declined in the third quarter, as the local economies struggled withworsening economic conditions. For Brown-Forman, a strong dollar amplified the intensity of the headwinds.
Varga did, however, indicate that underlying growth -- a measure adjusted for foreign currency exchange and net change in distributor inventories -- was strong for the whiskey maker: For the first nine months of 2015, underlying net sales of the Jack Daniel's family of brands grew by 7%, Jack Daniel's Tennessee Honey grew by 11%, and Woodford Reserve grew 29%.To put this in context, the Jack Daniel's family of brands represented 37.5% of total 2015 depletion volume while Tennessee Honey and Woodford Reserve represented 2.5% and 0.7%, respectively. Brown-Forman's highest volume brand is its Jack Daniel's whiskey, which represented 21.1% of total depletion volume in 2015.Depletion is a measure of how fast the product is leaving a distributor's warehouse and is used to gauge demand. In the earnings report, management also indicated that for 2016 underlying net sales growth will be 5% and underlying operating income growth will be in the range of 7% to 9%.
The article Is Now the Time to Buy Brown-Forman Corporation Stock? originally appeared on Fool.com.
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