Brown-Forman Corporation BF.B is set to report second-quarter fiscal 2016 results on Dec 2. Last quarter, it posted a positive earnings surprise of 1.4%. Let us see how things are shaping up for this announcement.
Factors Influencing this Quarter
Brown-Forman has been gaining from its strong portfolio of premium American whiskey brands, its Jack Daniel’s trademark and a balanced geographic approach. The company expects the trends that have been driving growth since fiscal 2012 to boost its fiscal 2016 results as well. However, adverse foreign exchange rates continue to play spoilsport.
Though the company reiterated its favorable outlook for fiscal 2016, it expects currency headwinds to linger throughout the fiscal, weighing on its results to an extent. Moreover, stiff competition from other players and any rise in excise taxes remain concerns. Also, a look at Brown-Forman’s earnings history depicts that the company underperformed the Zacks Consensus Estimate by an average of 1.6% over the last four quarters. Consequently, we remain apprehensive about the upcoming results.
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: Earnings ESP for Brown-Forman is 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at $1.00.
Zacks Rank: Brown-Forman carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
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:
Casey's General Stores Inc. CASY has an Earnings ESP of +2.08% and a Zacks Rank #1 (Strong Buy).
CarMax Inc. KMX has an Earnings ESP of +1.45% and a Zacks Rank #2 (Buy).
Restoration Hardware Holdings Inc. RH has an Earnings ESP of +1.59% and a Zacks Rank #3 (Hold).
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