On the surface, Brown‑Forman (NYSE: BF.B) is having an unremarkable year. Class B shares change hands for roughly $29, a steep 43 % below last October’s 52‑week high of $49.89 and only a few dollars above the springtime lows that rattled long‑term holders.
Yet behind the muted ticker tape is a spirits powerhouse whose fundamentals have rarely looked more intriguing for patient investors.
What The Market Is Fretting About
This year’s results, released in early June, showed reported net sales down 5 % as divestitures and currency headwinds bit into the top line, while diluted EPS slid 14 % to $1.84.
Management’s initial outlook for fiscal 2026, low‑single‑digit organic declines, did little to calm nerves. Layer on the EU’s threat to slap a 50 % tariff on American whiskey starting April 1, 2025, and it is easy to see why traders are pressing the sell button.
What many overlook is the quiet persistence of the founding Brown family. The clan still controls well over 50 % of the voting Class A shares, giving them the ability, and incentive, to steer the business for generations rather than quarters. That long view underpins capital allocation decisions outsiders sometimes misread as caution.
8 Decades of Dividend Muscle
Consider the payout record. Brown‑Forman has written a dividend check every year for 81 consecutive years and raised that check for 41 straight years, placing it among the elite Dividend Aristocrats.
The latest quarterly increase to $0.2265 per share was announced in May. At today’s price the forward yield sits near 3 %, richer than its five‑year average and almost double the S&P 500 yield.
Early in 2025 the company announced a sweeping restructuring that will trim 12 % of the workforce and shutter its Louisville cooperage, moves expected to save $70‑$80 million annually, roughly 6 % of last year’s operating income.
Investors skeptical of head‑count cuts may be missing that Brown‑Forman has simultaneously forged a multi‑year supply pact with Independent Stave Company, ensuring barrel quality while freeing capital previously tied up in heavy manufacturing assets.
Mexican Sleeper Hit Powering Growth
Ask ten U.S. analysts to name Brown‑Forman’s second‑largest brand, and most will guess Herradura tequila. Few realize it is actually New Mix, a ready‑to‑drink tequila‑based cocktail that shipped over 11 million nine‑liter cases in fiscal 2025, a double‑digit case‑volume jump that barely registers in Wall Street models focused on Jack Daniel’s.
New Mix is sold almost exclusively in Mexico, giving Brown‑Forman an emerging‑market growth lever that competitors cannot easily copy.
Last year’s U.S. launch of Jack Daniel’s & Coca‑Cola RTD was overshadowed by macro gloom, yet the brand is already cannibalizing lower‑margin Country Cocktails and lifting premium price points.
Management says the RTD/ready‑to‑premix portfolio’s organic revenue actually grew 5 % once currency noise is stripped out, hinting at a fresh profit engine just as tariffs threaten the core export whiskey business.
Risks or Tailwinds?
The looming EU duty is real, but nuance matters. Distributors have been pulling forward orders ahead of the April deadline, a quirk that padded fiscal‑year‑end case volumes and could repeat if politicians kick the tariff can down the road.
Meanwhile, Brown‑Forman’s share of sales that actually flow to the EU is barely one‑tenth of revenue, enough to sting, not enough to doom the thesis.
In the worst‑case scenario modeled by management, profit erosion runs in the high single digits, not catastrophic for a company sporting a debt‑to‑EBITDA ratio below 2× after paying down $300 million of notes this spring.
Premium Name at Discount Multiples
At 15.7 × trailing earnings and 4 × sales, Brown‑Forman changes hands at the deepest discount to its own five‑year average multiple in more than a decade.
Peer Constellation Brands, by contrast, trades near 5 × sales even after beer‑segment headaches. If Brown‑Forman merely re‑rates to its P/S multiple from a couple of years ago of 7x, the share price would be north of $50 without any help from earnings growth.
In addition, billions of barrels of maturing whiskey aging quietly in Tennessee and Kentucky. Because accounting rules keep that liquid gold on the balance sheet at cost, the market assigns little value to inventory whose replacement cost is materially higher after years of bourbon’s renaissance.
As those barrels roll out of warehouses over the next decade, they will carry gross margins that dwarf those of freshly distilled spirits, cushioning cash flow through cycles.
How high can the shares go in 2025?
The consensus 12‑month target sits at $33.43, a 16 % bump from the present level, while the highest published target is $48, implying 65 % upside.
Those numbers were set before the full benefits of the restructuring and before analysts had time to pencil in 2026 EPS accretion from cost saves. Management itself hasn’t updated guidance to reflect the fresh $70‑$80 million of annual cuts.
Put the pieces together, cost cuts, resilient RTD demand, tariff overhang already priced in, dividend support, and potential multiple expansion, and a reasonable base‑case path leads to the $33‑$35 range, roughly the consensus target.
Layer in a bullish cocktail of a tariff truce plus a sentiment swing toward quality consumer staples, and Wall Street’s top‑of‑range $48 target comes into view, effectively erasing the post‑pandemic downdraft. Even that would only put the stock back in line with its historical 25‑30 × earnings band on projected fiscal 2026 EPS.
Key Things To Watch
Of course, no spirits investment is foolproof. A protracted tariff war that kneecaps American whiskey exports, faster‑than‑expected declines in U.S. brown‑spirit consumption. Yet each of those risks sits opposite a tangible mitigation lever, political negotiation, RTD diversification, and long‑term supply contracts.
Brown‑Forman is trading like a tired old bourbon just as management is bottling a fresh release. With a family‑controlled governance moat, an 81‑year dividend streak, cost‑saving catalysts, and surprising growth pockets from New Mix to canned Jack & Coke, the stock looks primed to revisit the mid‑30s, even mid‑40s, before New Year’s Eve punches are poured. For investors willing to sip rather than shoot, the upside could prove more intoxicating than the market currently dares to expect.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.