Post updated with a correction.
Welcome to the Oct. 13 Monday Business Briefing.
This is your private business intelligence briefing with Insider Louisville staff and contributors vetting tips collected during the past few days, hours and minutes before we post.
But first, a note about this evening’s super-sized Insiders Meetup:
This “Extended Version” Insiders Meetup at ReSurfaced —the new pop-up event and art space located at 615-621 W. Main St. — will be held from 4:30 p.m. to 7:30 p.m. to allow everyone ample time to meet our guests.
Mayor Greg Fischer and Louisville Forward Chief Mary Ellen Weiderwohl will introduce their entire economic development team. These are the econ-dev rock stars tasked with new business attraction and business expansion, helping build the startup community and using our community’s strengths to move, well, forward.
It’s a rare occurrence to have them all together at one time. Weather forecasts show a break in the storms just in time for the meetup, so don’t let any lingering gray clouds keep you away.
The event is free, and you can register here for the few remaining spots. (We were at a whopping 467 registered attendees at last count!) Now, back to our regularly scheduled programing…
Is Brown-Forman the perfect stock?
Louisville’s Brown-Forman has had a great year, with its stock rising 25.5 percent, as of Oct. 10, over the past 12 months, well above the 14 percent rise enjoyed by U.S. markets.
But this is just the tip of the ice-cube for the spirits company. Reporting for the investing website Seeking Alpha, Ben Sender wrote a recent article titled “Is Brown-Forman The Perfect Stock?” His answer? It just might be.
Mainly because the company’s financials are so incredibly strong, with substantial growth, high profit margins, and low debt.
“As the maker of Jack Daniel’s along with many other brands, Forman has an unreplicable place in glasses around the world,” he wrote.
First, he looked at B-F’s gross profit margin of 69.5 percent, a number that’s been on the rise. “Putting this profitability in perspective with their equity, Forman returns 35.8 percent on net equity—placing it at the top of the industry,” he wrote.
At the same time, B-F has low corporate expenses and spends comparatively little on capital expenditures versus what it makes. In 2014, the company spent $126 million on capital expenditures, versus $659 million in income. It also uses its earnings to pay back shareholders, via buybacks and dividends. In fact, Forman pays an annual dividend of 1.32 percent.
Sender adds it’s hard to see any red flags on the company’s books, as B-F has way more assets than liabilities. In fact, 2014’s income alone would be enough to pay off all of Forman’s current liabilities.
Getting to specifics he notes Old Forester’s sales grew by 16 percent last year, and Woodford Reserve’s sales grew 26 percent. The latter marking its 18th consecutive year of double-digit growth.
Then there’s Jack Daniels, which remains a global giant and sold 11 million cases in fiscal year 2012-2013.
The Brown-Forman love continued at The Motley Fool, where it was declared a Dividend Aristocrat, meaning it’s increased its dividend payout annually for the past 25 years or more. This means you not only get to see the stock appreciate, you get paid while you do.
Locally, B-F is making news for its plan to open an Old Forester distillery and attraction in downtown Louisville.
Internationally, B-F continues to grow, with 59 percent of its sales coming from outside the U.S. It’s opened a sales and marketing HQ in France, Seeking Alpha reported, and introduced a Coca-Cola/Jack Daniel’s mix in the U.K.
The U.K. also was the site where B-F chose to most recently unveil its Woodford Reserve Double Oaked bourbon, launching last Friday, Oct. 10, according to the site just-drinks.com.
All-in-all, a Brown-Forman stock play looks pretty tasty, even if you don’t drink.