Morningstar Rating

Stock Research and Analysis

by Adam Fleck, CFA

Bulls Say

Tennessee Fire, a cinnamon-flavor Jack Daniel's, is being rolled out nationally and is off to a strong start, which could drive growth for Brown-Forman.
Higher volume has helped Brown-Forman leverage its expenses. The firm has brought down cost of goods sold and advertising expense per 9-liter case at 3.8% and 1.5% annual rates, respectively, since 2009.
Brown-Forman generates some of the best returns on invested capital in the spirits industry; they are typically higher than larger competitors such as Diageo and Pernod Ricard. Read more 

Bears Say

The number of craft distilleries in the U.S. has grown strongly in the past few years (to more than 550 in 2014 from about 24 in 2000), suggesting that Brown-Forman will see increased competition in the superpremium end of the market in the coming years.
The Brown family has majority control of the firm, which limits minority shareholders' ability to guide the direction of the company.
Brown-Forman is highly concentrated on the Jack Daniel's brand, which has been growing as a percentage of total volume. If the brand were to weaken, the firm would be greatly affected. Read more 

Management

Brown-Forman's managers have been exemplary stewards of shareholder capital. The company has been keenly focused on maximizing the potential of its Jack Daniel's family of brands and has been cautious when taking big steps such as the introduction of   Read more 

Profile

Based in Kentucky, Brown-Forman is a 145-year-old, family-owned premium spirits manufacturer with a portfolio of more than 25 brands. In fiscal 2014, 36 million 9-liter   Read more 

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