Sweeping the cobwebs from a previous fiscal forecast, Brown-Forman
Having previously predicted uncertain fiscal-year EPS results in the $2.60 to $3.00 range, the maker of Jack Daniel's whiskey and Finlandia vodka provided a steadier prediction on Tuesday.
Excluding one-time events, the forecast for the fiscal year ending April 30, 2010 is now in an EPS range of $2.95 to $3.15.
The company's second-quarter profit -- from August through October -- rose, even as revenue fell. On a GAAP basis, Brown-Forman earned $0.99 per share, up 5% from the year-ago quarter, while net sales of $892.9 million were off by 4%.
However, Brown-Forman echoed a warning issued by its peers that consumer behavior hasn't emerged from a recession-induced hangover. Like other sin stocks such as Altria
A leading indicator?
Thanks to its unusual fiscal year, Brown-Forman may serve as a signal for how fast the alcohol business may recover. When its largest competitor Diageo
Although Brown-Forman enjoyed a 15% gain in operating earnings for the first half of its current fiscal year, it expects a gain for the year in the low to mid-single digits, meaning that expectations for the rest of the year are substantially more dour than the growth thus far. During the second half, marketing and advertising expenses will be higher, and the company won't be doing the same amount of cost-cutting as it did in the first half.
Many alcoholic beverage companies -- including Anheuser-Busch InBev (NYSE: BUD and Molson Coors
For investors in Brown-Forman and in other alcoholic beverage companies, the major issue is how consumers will celebrate the alleged end of the recession. Trading down and drinking at home won't be good for share prices or morale.
For more sinful goodness: