BF-BBrown-Forman Corporation
Is the business good?
The checks split: earnings fully cash-backed (1.3×), but margins compressing.
Operating profit is fully backed by cash. Conversion is improving vs a year ago.
Operating margin has narrowed over the past few years, profitability per dollar of sales is eroding.
Margin-driven, fat margins on slower asset turns. ROE 19% = margin × turnover × leverage.
Unless marked, from derived.
Where this answer is blind. The F-score rewards improvement, so an already-elite company can score mid-pack.
How good a business is BF-B?
Brown-Forman Corporation earns 13% on the capital it employs against a 9.0% cost of capital, so the business is worth more the bigger it gets.
Return on invested capital · cost of capital 9.0% · 3.8 points above what the capital costs: growth creates value
- Operating margin
- 25%
Operating margin · Consumer Defensive median 8.1% · 12 months to Q1 2027
- Cash conversion
- 1.26×
Cash conversion · 0.85× a year ago · operating cash flow covers the operating profit after tax
- Share count, year on year
- −2.8%
Share count, year on year · bought back, each share owns more of the company
| Year | Operating margin |
|---|---|
| FY2021 | 34% |
| FY2022 | 31% |
| FY2023 | 27% |
| FY2024 | 34% |
| FY2025 | 28% |
| FY2026 | 25% |
Details›
- Gross margin12 months to Q1 2027
- 61%
- Operating margin12 months to Q1 2027
- 25%
- Net margin12 months to Q1 2027
- 18%
- Free cash flow margin
- 24%
- Revenue, trailing twelve months
- $3.92B
- Free cash flow, trailing twelve months
- $925M
- Net income, trailing twelve months
- $721M
- Return on invested capitaloperating profit after tax ÷ debt + equity − cash
- 13%
Margins, capital and share counts from the statements as filed with the SEC; cash conversion is operating cash flow over operating profit after tax.