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We came across a bullish thesis on Brown-Forman Corporation (BF-B) on Substack by Oliver | MMMT Wealth. In this article, we will summarize the bulls’ thesis on BF-B. Brown-Forman Corporation (BF-B)'s share was trading at $35.99 as of March 5th. BF-B’s trailing and forward P/E were 17.22 and 19.16 respectively according to Yahoo Finance.
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Brown-Forman (BFB), a leading spirits and wine company competing with Diageo and Pernod Ricard, owns iconic brands like Jack Daniel’s, Old Forester, and Chambord. Despite its strong market position, BFB trades at levels lower than in 2015, presenting an intriguing opportunity. The company’s revenue has grown by approximately $800 million since then, while net income has increased by $400 million. However, free cash flow has declined, which, along with high inventory levels and concerns over tariffs, has contributed to negative investor sentiment. While these risks are valid, BFB is less exposed to tariff challenges than its peers due to its strong presence in its home market. With a net income margin of 23.5% and an EV/Sales ratio of 4.4x, BFB remains fundamentally sound. Despite a slight revenue decline of 1.08%, the stock’s current valuation appears overly discounted. Investors may prefer a wait-and-see approach as sentiment in the sector remains weak. However, BFB’s long-standing commitment to shareholder returns is notable, with 39 consecutive years of dividend increases. For income-focused investors, this consistency adds to the company’s appeal, making BFB an attractive option in the consumer staples sector despite near-term headwinds.
Brown-Forman Corporation (BF-B) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 38 hedge fund portfolios held BF-B at the end of the fourth quarter which was 24 in the previous quarter. While we acknowledge the risk and potential of BF-B as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than BF-B but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.