| BF-A Stock | | | USD 41.91 0.88 2.14% |
Considering Brown Forman's profitability and operating efficiency indicators, Brown Forman may not be well positioned to generate adequate gross income at this time. It has a very high probability of underperforming in December. Profitability indicators assess Brown Forman's ability to earn profits and add value for shareholders. The current year's
Sales General And Administrative To Revenue is expected to grow to 0.24, whereas
Price To Sales Ratio is forecasted to decline to 3.14. At present, Brown Forman's
Operating Income is projected to increase significantly based on the last few years of reporting. The current year's
Income Before Tax is expected to grow to about 1.4
B, whereas
Accumulated Other Comprehensive Income is forecasted to decline to (232.1
M).
For Brown Forman profitability analysis, we use financial ratios and fundamental drivers that measure the ability of Brown Forman to generate income relative to revenue, assets, operating costs, and current equity. These
fundamental indicators attest to how well Brown Forman utilizes its assets to generate profit and value for its shareholders. The profitability module also shows relationships between Brown Forman's most relevant fundamental drivers. It provides multiple suggestions of what could affect the performance of Brown Forman over time as well as its relative position and ranking within its peers.
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Please note, there is a significant difference between Brown Forman's value and its price as these two are different measures arrived at by different means. Investors typically determine if Brown Forman is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Brown Forman's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.
Brown Forman EBITDA vs. Current Valuation Fundamental Analysis
Comparative valuation techniques use various fundamental indicators to help in determining Brown Forman's current stock value. Our valuation model uses many indicators to compare Brown Forman value to that of its competitors to determine the firm's financial worth.
Brown Forman is rated
below average in current valuation category among its peers. It also is rated
below average in ebitda category among its peers totaling about
0.06 of EBITDA per Current Valuation. The ratio of Current Valuation to EBITDA for Brown Forman is roughly
18.06 . At present, Brown Forman's
EBITDA is projected to increase significantly based on the last few years of reporting. The reason why the comparable model can be used in almost all circumstances is due to the vast number of multiples that can be utilized, such as the price-to-earnings (P/E), price-to-book (P/B), price-to-sales (P/S), price-to-cash flow (P/CF), and many others. The P/E ratio is the most commonly used of these ratios because it focuses on the Brown Forman's earnings, one of the primary drivers of an investment's value.
Brown Current Valuation vs. Competition
Brown Forman is rated
below average in current valuation category among its peers. After adjusting for long-term liabilities,
total market size of
Consumer Staples industry is currently estimated at about 318.64 Billion. Brown Forman holds roughly 22.25 Billion in current valuation claiming about 7% of stocks in Consumer Staples industry.
Brown EBITDA vs. Current Valuation
Enterprise Value is a firm valuation proxy that approximates the current market value of a company. It is typically used to determine the takeover or merger price of a firm. Unlike Market Cap, this measure takes into account the entire liquid asset, outstanding debt, and exotic equity instruments that the company has on its balance sheet. When a takeover occurs, the parent company will have to assume the target company's liabilities but will take possession of all cash and cash equivalents.
Brown Forman | Enterprise Value | = | Market Cap + Debt | - | Cash |
| = | 22.25 B |
Enterprise Value can be a useful tool to compare companies with different capital structures. Long term liability and current cash or cash equivalents can have a huge impact on market valuation of a given company.
EBITDA stands for earnings before interest, taxes, depreciation, and amortization. It is a measure of a company operating cash flow based on data from the company income statement and is a very good way to compare companies within industries or across different sectors. However, unlike Operating Cash Flow, EBITDA does not include the effects of changes in working capital.
Brown Forman | EBITDA | = | Revenue | - | Basic Expenses |
| = | 1.23 B |
In a nutshell, EBITDA is calculated by adding back each of the excluded items to the post-tax profit, and can be used to compare companies with very different capital structures.
Brown EBITDA Comparison
Brown Forman is currently under evaluation in ebitda category among its peers.
Brown Forman Profitability Projections
The most important aspect of a successful company is its ability to generate a profit. For investors in Brown Forman, profitability is also one of the essential criteria for including it into their portfolios because, without profit, Brown Forman will eventually generate negative long term returns. The profitability progress is the general direction of Brown Forman's change in net profit over the period of time. It can combine
multiple indicators of Brown Forman, where stable trends show no significant progress. An accelerating trend is seen as positive, while a decreasing one is unfavorable. A rising trend means that profits are rising, and operational efficiency may be rising as well. A decreasing trend is a sign of poor performance and may indicate upcoming losses.
Brown Profitability Driver Comparison
Profitability drivers are factors that can directly affect your
investment outlook on Brown Forman. Investors often realize that things won't turn out the way they predict. There are maybe way too many unforeseen events and contingencies during the holding period of Brown Forman position where the market behavior may be hard to predict, tax policy changes, gold or oil price hikes, calamities change, and many others. The question is, are you prepared for these unexpected events? Although some of these situations are obviously beyond your control, you can still follow the important profit indicators to know where you should focus on when things like this occur. Below are some of the Brown Forman's important profitability drivers and their relationship over time.
Use Brown Forman in pair-trading
One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if Brown Forman position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Brown Forman will appreciate offsetting losses from the drop in the long position's value.
The ability to find closely correlated positions to Brown Forman could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Brown Forman when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Brown Forman - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Brown Forman to buy it.
The correlation of Brown Forman is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as Brown Forman moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Brown Forman moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for Brown Forman can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.
Use Investing Themes to Complement your Brown Forman position
In addition to having Brown Forman in your portfolios, you can quickly add positions using our predefined set of ideas and optimize them against your very unique investing style. A single investing idea is a collection of funds, stocks, ETFs, or cryptocurrencies that are programmatically selected from a pull of investment themes. After you determine your investment opportunity, you can then find an optimal portfolio that will maximize potential returns on the chosen idea or minimize its exposure to market volatility.
Millennials Best
Companies or funds that provide products or services that appeal to the generation of millennials and that are expected to experience growth in the next 5 years. The millennial generation usually refers to the demographic population that were born between 1980 to 2000. The Millennials Best theme has 77 constituents at this time.
You can either use a buy-and-hold strategy to lock in the entire theme or actively trade it to take advantage of the short-term price volatility of individual constituents. Macroaxis can help you discover thousands of investment opportunities in different asset classes. In addition, you can
partner with us for reliable portfolio optimization as you plan to utilize
Millennials Best Theme or any other
thematic opportunities.
Other Information on Investing in Brown Stock
To fully project Brown Forman's
future profitability, investors should examine all historical financial statements. These statements provide investors with a comprehensive snapshot of the
financial position of Brown Forman at a specified time, usually calculated after every quarter, six months, or one year. Three primary documents fall into the category of financial statements. These documents include Brown Forman's income statement, its balance sheet, and the statement of cash flows.
Potential Brown Forman investors and stakeholders can use historical trends found within financial statements to determine how well the company is positioned for the future. Although Brown Forman investors may work on each financial statement separately, they are all related. The changes in Brown Forman's assets and liabilities, for example, are also reflected in the revenues and expenses that we see on Brown Forman's income statement, which results in the company's gains or losses. Cash flows can provide more information regarding cash listed on a balance sheet but not equivalent to net income shown on the income statement. Please read more on our technical analysis and fundamental analysis pages.
