Value
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 7.0 |
| P/S | 8.1 |
| EV/EBITDA | 4.3 |
| Fwd P/E | 7.6 |
| PEG | 2.8 |
| Analyst target | 3.0 |
- ▸Forward P/E: 16.3x
- ▸PEG: 4.46
BF-B · Why this verdict
Why Brown Forman (BF-B) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score4.8/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
A well-run consumer defensive business with 18% operating margins and a near-perfect Piotroski financial-health score, but the stock has moved above its near-term technical target — presenting negative net upside — while 3 of the past 4 quarterly earnings reports were misses including the most recent; the setup favors patience rather than fresh exposure.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Short interest stands at 13% of float, indicating that a material share of the market is positioned against the stock; this elevated short base creates ongoing overhead selling pressure and suggests institutional skepticism about the near-term earnings trajectory. Key risks | Short interest falls below 7% of float for 2 consecutive months as bearish conviction fades. | →Stable |
| CounterHigh short interest can become a source of upside fuel if the company posts a surprise beat, as short-covering can amplify any positive price move beyond what fundamentals alone would drive. | ||
Strong operating margins of 18%, a Piotroski F-Score of 8 out of 9, and solid cash flow conversion establish genuine franchise quality, but a PEG of 4.33 and a forward P/E of 15.8 times price in growth the company has not yet delivered, leaving the valuation dependent on an earnings acceleration that has not arrived. Quality breakdown | Annual EPS grows more than 20% year-over-year for 2 consecutive fiscal years, compressing the PEG to below 2.0 and justifying the current multiple. | →Stable |
| CounterHigh-quality consumer defensive businesses have historically held premium multiples through prolonged growth droughts; if the category cycle turns, earnings can recover faster than consensus currently anticipates. | ||
The current price has moved above the near-term resistance target, leaving a negative net upside of approximately 0.5%; at this level the risk/reward is unfavorable and there is no price cushion to absorb any negative news without an immediate loss. Price targets | Analyst consensus target is raised more than 15% above the current price of $26.94, re-opening a meaningful upside gap. | →Stable |
| CounterA recovery setup with improving MACD and rising on-balance volume suggests momentum could carry price modestly higher from here even beyond the current technical target, particularly if broader market sentiment stays constructive. | ||
Three of the past four quarterly earnings reports were misses, including the most recent quarter which came in 62.65% below consensus — a pattern that signals management guidance is unreliable or operating pressures are not being adequately reflected in forward estimates. Earnings | EPS surprise exceeds 5% for 2 consecutive quarterly reports, signaling the miss pattern has reversed. | →Stable |
| CounterOne of the four quarters was a strong beat at 24.68% above estimate, and the two earlier misses were very small (-1.46% and -1.86%), suggesting the most recent deep miss may be a one-time event rather than a structural delivery problem. | ||
Short interest stands at 13% of float, indicating that a material share of the market is positioned against the stock; this elevated short base creates ongoing overhead selling pressure and suggests institutional skepticism about the near-term earnings trajectory.
→StableKey risks
- Expectation
- Short interest falls below 7% of float for 2 consecutive months as bearish conviction fades.
CounterHigh short interest can become a source of upside fuel if the company posts a surprise beat, as short-covering can amplify any positive price move beyond what fundamentals alone would drive.
Strong operating margins of 18%, a Piotroski F-Score of 8 out of 9, and solid cash flow conversion establish genuine franchise quality, but a PEG of 4.33 and a forward P/E of 15.8 times price in growth the company has not yet delivered, leaving the valuation dependent on an earnings acceleration that has not arrived.
→StableQuality breakdown
- Expectation
- Annual EPS grows more than 20% year-over-year for 2 consecutive fiscal years, compressing the PEG to below 2.0 and justifying the current multiple.
CounterHigh-quality consumer defensive businesses have historically held premium multiples through prolonged growth droughts; if the category cycle turns, earnings can recover faster than consensus currently anticipates.
The current price has moved above the near-term resistance target, leaving a negative net upside of approximately 0.5%; at this level the risk/reward is unfavorable and there is no price cushion to absorb any negative news without an immediate loss.
→StablePrice targets
- Expectation
- Analyst consensus target is raised more than 15% above the current price of $26.94, re-opening a meaningful upside gap.
CounterA recovery setup with improving MACD and rising on-balance volume suggests momentum could carry price modestly higher from here even beyond the current technical target, particularly if broader market sentiment stays constructive.
Three of the past four quarterly earnings reports were misses, including the most recent quarter which came in 62.65% below consensus — a pattern that signals management guidance is unreliable or operating pressures are not being adequately reflected in forward estimates.
→StableEarnings
- Expectation
- EPS surprise exceeds 5% for 2 consecutive quarterly reports, signaling the miss pattern has reversed.
CounterOne of the four quarters was a strong beat at 24.68% above estimate, and the two earlier misses were very small (-1.46% and -1.86%), suggesting the most recent deep miss may be a one-time event rather than a structural delivery problem.
Per-dimension breakdown
Quality
7.8/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 5.9 |
| ROA | 5.8 |
| Gross margin | 8.1 |
| Op margin | 9.3 |
| Net margin | 9.1 |
| Current ratio | 9.8 |
| FCF quality | 7.2 |
| Moat | 6.5 |
| Piotroski F | 8.9 |
- ▸Strong margins: 18%
- ▸Strong Piotroski F-Score: 8/9
- ▸High-quality business
Growth
1.5/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.0 |
| EPS growth | 0.0 |
Momentum
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.4 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 8.0 |
| Volume | 0.0 |
- ▸Overbought (RSI 73)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-MA but MA slope flat
Sentiment
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 5.0 |
| erm sentiment | 4.1 |
Insider
5.0/10data confidence 50%Peer rank
3.8/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.0 |
| quality rank | 1.7 |
| growth rank | 3.3 |
Technical
3.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.1 |
| support resistance | 0.6 |
| 52w position | 6.7 |
| gap | 6.0 |
Risk (lower is worse)
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 3.7 |
| days to cover | 6.1 |
| volatility | 5.4 |
| put call | 5.9 |
| max pain risk | 3.0 |
| beta | 10.0 |
| debt equity | 7.1 |
- ▸Above max pain $15
- ▸Concentration risks: 3 MED (10-K Item 1A)
Catalyst
3.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 3.5 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| dividend safety | 6.5 |
- ▸Earnings concerns: 1B/3M
- ▸Dividend: 331.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:6.5>=5.5
- INSIDER:OK
- DEATH_CROSS:QUALITY_MOMENTUM_EXEMPT
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:63d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.8=NEGATIVE
Warning (2)
- DEATH_CROSS:quality=7.8>=7.5+momentum=6.5>=5.0 exempted
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.84
Upside
-10.0%
Downside
12.0%
Sizing output
AVOID
SetupRECOVERY — Death cross but MACD improving, RSI 73
EdgeNO_EDGE — No clear edge identified
SuitabilityMODERATE — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 4.8 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Quality at 7.8) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.8=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.84 — supplementary context, not the trigger for this path.
The strongest dimensions are Quality at 7.8, Momentum at 6.5, and Risk (lower is worse) at 5.9; the weakest are Growth at 1.5, Catalyst at 3.0, and Technical at 3.6. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of -0.84 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Strong operating margins of 18%, a Piotroski F-Score of 8 out of 9, and solid cash flow conversion establish genuine franchise quality, but a PEG of 4.33 and a forward P/E of 15.8 times price in growth the company has not yet delivered, leaving the valuation dependent on an earnings acceleration that has not arrived.
Trip ifAnnual EPS grows more than 20% year-over-year for 2 consecutive fiscal years.
- P2The current price has moved above the near-term resistance target, leaving a negative net upside of approximately 0.5%; at this level the risk/reward is unfavorable and there is no price cushion to absorb any negative news without an immediate loss.
Trip ifAnalyst consensus target is raised more than 15% above current price of $26.94.
- P3Three of the past four quarterly earnings reports were misses, including the most recent quarter which came in 62.65% below consensus — a pattern that signals management guidance is unreliable or operating pressures are not being adequately reflected in forward estimates.
Trip ifEPS surprise exceeds 5% for 2 consecutive quarterly reports.
- P4Short interest stands at 13% of float, indicating that a material share of the market is positioned against the stock; this elevated short base creates ongoing overhead selling pressure and suggests institutional skepticism about the near-term earnings trajectory.
Trip ifShort interest falls below 7% of float for 2 consecutive months.