Unexpectedly stronger headwinds from foreign exchange and input costs aren't exactly unusual today, but they are combining to make life more challenging for Brown-Forman (NYSE:BF.A)(NYSE:BF.B). On top of that, the underlying volumes in spirits aren't really that exceptional and the stock remains richly-valued by most approaches.
These shares are down around 10% since my last update, underperforming consumer staples (the Consumer Staples Select Sector SPDR Fund (XLP)) overall and names I preferred back in the day like Diageo (DEO) (that article is here) and Pernod Ricard (OTCPK:PRNDY) (that article is here). Still, while the long-term returns haven't been bad at all (a double-digit annualized total return over the last 10 and 15 years), the valuation today is no clear bargain to me, and I don't really find this a compelling idea even after the sharp post-earnings reaction.
Read the full article here:
Brown-Forman: Not A Compelling Idea - Softening Volumes, Weaker Margins, And High Valuation
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