Liquor distributor Brown-Forman (NYSE:BF-B) will report fourth-quarter and fiscal-year 2007 financial results on Tuesday, June 5. Here's one more look at expectations for the road.

What analysts say:

  • Buy, sell, or waffle? Of the eight analysts covering Brown-Forman, half of them say you should drink up shares with a buy rating. Three say it's better to hold your liquor, and only one says sell.
  • Revenues. Sales from continuing operations are expected to go down smooth, rising 16% to $690.8 million from the comparable quarter.
  • Earnings. Profits, however, are forecast to give little comfort, Southern or otherwise, falling 20% to $0.50 per share as the company's Casa Herradura tequila acquisition exerts its dilutive pressures.

What management says:
Jack Daniel's whiskey has been the mainstay of Brown-Forman's sales lately, particularly overseas, but with the rising popularity of tequila, the liquor and wine distributor is consolidating its mesquite ventures. In the golden amber hue of its Casa Herradura purchase, Brown-Forman recently ended a joint venture with Mexico's Tequila Orendain that will see it buy out the Don Eduardo super premium brand.

"Termination of the joint ventures with the Orendain family was a natural step for both parties, given our purchase of Casa Herradura," said Brown-Forman President and CEO Paul Varga. "Each side will now handle its own products and we will produce all of our tequila brands out of our Casa Herradura manufacturing operation."

Nielsen Scantrack & LiquorTrack data says tequila is the fastest-growing liquor in the country, with sales growing more than 12% in 2006. Casa Herradura is third in popularity behind Jose Cuervo from Diageo (NYSE:DEO) and Sauza from Fortune Brands (NYSE:FO). I'll drink to that.

What management does:
Whiskey, tequila, and the recently acquired raspberry-flavored Chambord have been a triumvirate of sales growth for the distributor, which has seen sales volume grow by double-digit rates with a mid-single-digit increase for depletions. Volume measures the number of nine-liter cases sold, while depletions represent the number of shipments from distributors to retail customers. Depletions are a standard industry measure, serving as a proxy for consumer demand. Changes in overseas distribution agreements, however, have pushed up SG&A expenses, which have cut into margins.

























All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Brown-Forman is a heady competitor to Diageo, Fortune Brands, and Constellation Brands (NYSE:STZ), with a cellar full of respected industry brands. While the Casa Herradura acquisition may temporarily cut into profits, the consolidation it's making in its tequila manufacturing processes should allow Brown-Forman to tap this burgeoning market.

Related Foolishness:

As of this writing, Brown-Forman had earned a four-star rating from Motley Fool CAPS, the new investor-intelligence community. You can add your voice to the stock-rating service by joining today. It's free!

Diageo is a recommendation of Motley Fool Income Investor. To see what other great dividend payers are helping the newsletter beat the market, take a free 30-day trial today.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.