My analysis of Brown-Forman is accessible through my guest post at Dividend Power.
When I wrote my December 13, 2016 Brown-Forman Corporation Stock Analysis: Enriching Life? Not Lately! post, the company's slogan was Enriching Life. Now, the company's slogan is Nothing Better. If Brown-Forman (BF) is talking about its investment performance, nothing could be further from reality.
While BF is a Dividend Aristocrat, dividend metrics have no bearing on my investment decision making process. My interest lies in total potential shareholder return.
Wealth is often created when we opportunistically acquire shares in great companies that have temporarily fallen out of favor. Despite BF having fallen out of favor with investors, I see no reason why I would want to initiate a position.
I do not dispute that BF's risk is acceptable and that shares are significantly undervalued. What turns me off from the company is that its products are unhealthy and contribute to some of society's current problems.
BF products are unnecessary expenditures and many BF consumers would do well to stop consuming this 'garbage'. Furthermore, if consumers need to 'tighten their belts', the consumption of BF's alcoholic products is likely to suffer.
Although BF has several recognizable brands, the wineries and distilleries industry is highly competitive. I do not think that BF can significantly increase its prices, and therefore, do not expect any meaningful top line growth; management's outlook supports this observation.
Many other companies have the potential to generate total average annual shareholder returns over the long-term that are well in excess of what BF is likely to generate. I, therefore, have no intention of initiating a BF position.
I wish you much success on your journey to financial freedom!
Note: Please send any feedback, corrections, or questions to [email protected].
Disclosure: I do not have Brown-Forman exposure and have no intention of initiating a position.
Disclaimer: I do not know your circumstances and do not provide individualized advice or recommendations. I encourage you to make investment decisions by conducting your research and due diligence. Consult your financial advisor about your specific situation. I wrote this article myself and it expresses my own opinions. I do not receive compensation for it and have no business relationship with any company mentioned in this article.
