Brown-Forman Corporation
Brown-Forman Corporation Fundamental Analysis
Brown-Forman Corporation (BF-A) shows moderate financial fundamentals with a PE ratio of 13.72, profit margin of 20.58%, and ROE of 19.93%. The company generates $3.9B in annual revenue with weak year-over-year growth of -4.86%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 55.7/100 based on profitability, valuation, growth, and balance sheet metrics. The C grade reflects average fundamentals, with notable risks in certain areas.
Fundamental Health Score
We analyze BF-A's fundamental strength across five key dimensions:
Efficiency Score
WeakBF-A struggles to generate sufficient returns from assets.
Valuation Score
ExcellentBF-A trades at attractive valuation levels.
Growth Score
WeakBF-A faces weak or negative growth trends.
Financial Health Score
ExcellentBF-A maintains a strong and stable balance sheet.
Profitability Score
ExcellentBF-A achieves industry-leading margins.
Key Financial Metrics
Is BF-A Expensive or Cheap?
P/E Ratio
BF-A trades at 13.72 times earnings. This suggests potential undervaluation.
PEG Ratio
When adjusting for growth, BF-A's PEG of 0.14 indicates potential undervaluation.
Price to Book
The market values Brown-Forman Corporation at 2.71 times its book value. This may indicate undervaluation.
EV/EBITDA
Enterprise value stands at 7.28 times EBITDA. This is generally considered low.
How Well Does BF-A Make Money?
Net Profit Margin
For every $100 in sales, Brown-Forman Corporation keeps $20.58 as profit after all expenses.
Operating Margin
Core operations generate 28.43 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $19.93 in profit for every $100 of shareholder equity.
ROA
Brown-Forman Corporation generates $9.72 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Brown-Forman Corporation produces operating cash flow of $856.88M, showing steady but balanced cash generation.
Free Cash Flow
Brown-Forman Corporation generates strong free cash flow of $726.50M, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $1.55 in free cash annually.
FCF Yield
BF-A converts 6.58% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
13.72
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
0.14
vs 25 benchmark
P/B Ratio
Price to book value ratio
2.71
vs 25 benchmark
P/S Ratio
Price to sales ratio
2.81
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.67
vs 25 benchmark
Current Ratio
Current assets to current liabilities
2.77
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.20
vs 25 benchmark
ROA
Return on assets percentage
0.10
vs 25 benchmark
ROCE
Return on capital employed
0.16
vs 25 benchmark
How BF-A Stacks Against Its Sector Peers
| Metric | BF-A Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 13.72 | 22.53 | Better (Cheaper) |
| ROE | 19.93% | 1238.00% | Weak |
| Net Margin | 20.58% | -6235.00% (disorted) | Strong |
| Debt/Equity | 0.67 | 1.25 | Strong (Low Leverage) |
| Current Ratio | 2.77 | 2.41 | Strong Liquidity |
| ROA | 9.72% | -157319.00% (disorted) | Weak |
BF-A outperforms its industry in 4 out of 6 key metrics, particularly excelling in Net Margin, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Brown-Forman Corporation's 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
19.48%
Industry Style: Defensive, Dividend, Low Volatility
High GrowthEPS CAGR
6.21%
Industry Style: Defensive, Dividend, Low Volatility
GrowingFCF CAGR
-16.51%
Industry Style: Defensive, Dividend, Low Volatility
Declining