Brown Forman Corp (BF.A) stock analysis

P/E below its 5-year median

Brown Forman's P/E of 18.1 is below its own 5-year median of 24.1.

P/E below the industry

Brown Forman's P/E of 18.1 is below the Beverages median of 30.3.

EV/EBITDA below its 5-year median

Brown Forman's EV/EBITDA of 13.8 is below its 5-year median of 18.3.

P/B above the industry

Brown Forman's price-to-book of 3.24 is above the Beverages median of 3.07.

Trading below fair value

The share price of $28.04 is below our fair value estimate of $36.93.

Margin of safety over 20%

The price is 24.1% below fair value, more than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew -2.4% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew -2.1% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew -14.6% over the last twelve months, against a 5-year average of -4.6% a year.

Growing slower than the industry

Revenue grew -0.8% over the last twelve months; the Beverages median is 5.3%.

Guidance lowered

Brown Forman lowered its fiscal 2026 forecasted effective tax rate outlook on Mar 4, 2026.

Gross margin improving

Gross margin was 60.7% over the last twelve months, against 59.0% a year earlier.

Return on equity over 15%

Return on equity was 18.1% over the last twelve months and averaged 25.7% over five years.

Return on capital over 10%

Return on invested capital was 13.0%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Brown Forman's return on equity of 18.1% is above the Beverages median of 9.2%.

Earnings shrank over 5 years

Net income shrank 4.6% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 18.4% over the last twelve months, against a 5-year average of 20.9%.

Net margin above the industry

Brown Forman's net margin of 18.4% is above the Beverages median of 7.1%.

High debt

Debt is 61.5% of shareholders' equity, above the 40% we consider low.

Debt falling against equity

Debt to equity fell from 96.3% five years ago to 61.5%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 41.5% of total debt.

Interest well covered

Operating income covers interest expense 9.6 times.

Short-term assets cover short-term debts

Current assets are 3.26 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 4.23; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Brown Forman paid dividends worth 3.3% of the share price over the last twelve months.

Yield below Treasuries

The 3.3% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 4.0% or more; Brown Forman yields 3.3%.

Dividend was cut

The dividend per share fell by more than 10% at least once in the last 10 fiscal years.

Covered by earnings

Dividends take 59.1% of net income.

Covered by free cash flow

Dividends take 46.1% of free cash flow.