Wednesday, December 9, 2009

BF.B Q2 2010 Earnings 12/08/09 - (Christian LaBier)

Brown-Forman's two strongest brands (Jack Daniel's and el Jimador) have been driving the company to better than expected sales for the quarter. Management has feared that the consumer would trade down because of the difficult economic situation, but Jack Daniel's and the Pre Mix products have been producing strong sales globally. Effective cost cutting measures taken by the company have helped the company stay competitve in the current market.

Management increased FY2009 guidance to a range of $2.95-$3.15 per share from an original estimate of $2.60-%3.00 per share.

"This updated guidance reflects our better than expected sales performance in the first half of the year, our excellent management of operating expenses and our confidence about our ability to operate effectively in what remains a competitive and uncertain environment." - Don Berg (CFO)

The stock price moved up approximately 5% yesterday when earnings were released, however, the stock ended the day flat. BF.F is currently trading at $51.78 and the position in the portfolio is down 2.38%. I want to hold the position because the Jack Daniel's brand and the upcoming ready-to-drink segments are solid and have room for growth. I don't see the stock price ranging far from it current level. BF.F also pays a steady dividend. I will continue to monitor.


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