Brown-Formans earnings are expected to be helped by the US recovery

Brown-Forman's earnings are expected to be helped by the US recovery

Brown-Forman has scope to deliver earnings growth ahead of forecasts as momentum returns to the US economy, according to an analyst. 

The US-based spirits and wines firm announced a 19% rise in Q1 operating profits yesterday (29 August) as its flagship brand Jack Daniel's grew sales by 15%. The group also confirmed its full-year outlook of high single-digit growth in underlying sales and operating profits. 

Analysts Nomura said in a note today that the group's growth looks "robust".

In June, Nomura forecast medium-term EBIT growth of about 9% per year for Brown-Forman. "If anything, we see scope for this to accelerate as momentum in the US continues to rebuild," the note said. "We continue to see spirits as a good place to invest in the consumer world." 

Nomura repeated its prediction from June that it expects the company to be "more acquisitive" but on a "moderate scale".  "In theory, leveraging up to 2.5x net debt/EBITA could justify up to US$3bn of firepower. However, we would expect smaller specific brand or country deals," Nomura said.