Jack Daniel’s Maker Brown-Forman Reports Good Earnings Amid Tariff Tempest
A bright spot in the U.S. market today comes from a liquor brand that has gotten a lot of free publicity in the lyrics of many a country music song…
In its Q4 2018 earnings report, Brown-Forman Corp (BFB), the owner of Jack Daniel’s whiskey, beat Wall Street estimates with a premium bourbon, Woodford Reserve, up 23 percent in sales from last year, and other key brands seeing rises.
However, spokespersons conceded that unanticipated tariff threats dragged sales down about one percent through the year, with Q4 net income of about $159 million. So, what’s next…?
People at Brown-Forman have been sanguine about Jack Daniel’s whiskey prospects for beating the tariff blues: in March, the company reported earnings per share of 47 cents for the third quarter, an increase of 20 percent year-over-year.
At that time, shares declined 6.66 percent to $48.06, but quickly recovered within the course of a week. Now, BFB is up over $50 per share.
The news that BFB’s sales have been hurt by price changes to distributors used to offset tariffs, as reported back in March, might make a U.S. investor want to have a drink. Still, the whiskey giant is confident as trade conflicts ratchet up around the world that it’s going to be an island of sanity in a sea of red ink.
Brown-Forman also sells special tequilas Herradura and el Jimador.
As other brands feel tariff pain, a firm that can navigate these choppy financial waters could look pretty good. As Frank Sinatra says of New York: “If you can make it there, (as American and Chinese state officials willfully burn down the market) you can make it anywhere!” All things considered, now might be a good time to fill up the liquor cabinet, or stock up on BFB equities.
