Is Brown-Forman (BF.B) Poised to Beat Earnings in Q4?

Zacks

Brown-Forman Corporation BF.B, the world’s leading producer and distributor of premium alcoholic beverages, is slated to report its fourth-quarter fiscal 2015 results on Jun 3, before the opening bell. In the last quarter, the company’s earnings of 87 cents per share came in line with the Zacks Consensus Estimate. Let’s see how things are shaping up for this announcement.

Factors Influencing This Quarter

Brown-Forman’s third-quarter results benefited from its strong portfolio of premium American whiskey brands and a balanced geographic approach, offset by adverse foreign exchange rate. Though the company envisions solid results for the fourth-quarter and fiscal 2015 driven by stability in the global markets, it expects the ongoing foreign exchange headwinds to continue to negatively impact results.

We believe that the company’s consistent focus on developing its premium Jack Daniel’s brand through innovation and packaging changes has paid off. Moreover, we expect Brown-Forman’s pricing strategy, product innovation and penetration in emerging markets to drive growth.

However, we remain cautious about the rising tension between Russia and the West, stiff competition as well as risks arising from international market operations, which may adversely impact the company’s performance.

Earnings Whispers?

Our proven model does not conclusively show that Brown-Forman is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:

Zacks ESP: Brown-Forman’s Earnings ESP is currently pegged at 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at 66 cents.

Zacks Rank: Brown-Forman carries a Zacks Rank #3 (Hold). Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult. We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks that Warrant a Look

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 this quarter:

Casey's General Stores Inc. CASY has an Earnings ESP of +14.29% and a Zacks Rank #2 (Buy).

Burlington Stores, Inc. BURL has an Earnings ESP of +5.00% and a Zacks Rank #3.

G-III Apparel Group Ltd. GIII has an Earnings ESP of +14.29% and a Zacks Rank #3.

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