Sin stocks — alcohol, tobacco and gambling companies namely — often make sound investments. When times are good, we celebrate, so it’s time to break out the whisky and toast a promotion or the purchase of a new house or condo.
When we lose our job and that condo, well, a good stiff drink is in order to help us forget about overdrafts and calls from collection agencies. In today’s economy, people seem to be doing one or the other.
A look at Brown-Forman (BFB) earnings in its fiscal-year third quarter ending Jan. 31 shows the maker of Jack Daniels Whiskey and el Jimador Tequila is selling bottles no matter what the occasion, not only at home in the United States but also abroad.
Net sales in the period were up 12 percent on year at $962.4 million, while net income was up 30 percent at $140.7 million, thanks in part to heavy demand overseas. Operating income was up 30 percent to $226 million.
The company also reports that diluted earnings per share rose 32 percent on year to $0.96
"We continue to be pleased with our broad-based growth encompassing both developed and emerging international markets. Led by strong performances of the Jack Daniel's Family of Brands and el Jimador, our third quarter results showed an acceleration of growth over the first half," says company CEO Paul Varga.
"We also were encouraged by the improving top line results in the United States. Based on our strong third quarter, and better than anticipated first nine months, we have raised our full year guidance."
Specifically, Brown-Forman is raising its fiscal 2011 full-year earnings outlook to a range of $3.35 to $3.45 per share (it did not specify the previous estimate).
Stock buyback planned
Analysts believe the company is right for buying, with Zacks Investment Research assigning the company's stock an outperform rating. The company, meanwhile, is managing its finances to prepare for growth.
The board has given the green light to repurchase up to $250 million of its outstanding Class A and Class B common shares through Nov. 30, 2011.
"The announcement of this share repurchase authorization demonstrates our continued confidence in the long-term growth prospects of Brown-Forman," Varga says.
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