This maker of Jack Daniel’s, Finlandia vodka, Canadian Mist, Korbel champagnes, Southern Comfort, and other well known spirits did report good Q4 and full FY 2013 numbers on June 5: a 16% increase in full year diluted EPS, full year underlying sales growth of 8%, and underlying operating income growth of 13%. Net sales for FY 2013 came in at $3.78 billion. Brown-Forman Corporation (NYSE:BF.A) also reported an improvement in premium brand sales, echoing the trend reported by Beam.
The company guided for continued strong growth for FY 2014. Brown-Forman Corporation (NYSE:BF.A) is trading at a 25.97 trailing P/E with a yield of 1.6%. Its stock has underperformed the S&P 500, only up 18.45% despite beating estimates the last four quarters.
Dominant Diageo
Meanwhile Diageo plc (ADR) (NYSE:DEO) controls a quarter of the vodka market and two major spirit industry trends, low calorie drinks and flavored vodkas, are well represented at Diageo. These are so important to offset the trend toward in the US toward more beer and wine purchases and away from spirits as Fellow Fool Dan Caplinger points out.
Diageo plc (ADR) (NYSE:DEO) has fourteen strategic premium brands of which the following six are number one brands in their categories globally: Johnnie Walker scotch, Jose Cuervo tequila, Crown Royal Canadian whiskey, Smirnoff premium vodka, Guiness stout, and Baileys liqueur. The company operates in 180 countries giving it the largest global reach of these three companies.
Aside from assertively targeting women as a new market the company plans to woo more premium consumers as well as court emerging markets with innovative packaging, cans or other delivery systems for smaller markets and other initiatives like the ladies’ Snapp drinks in Africa and its female-oriented Eva line of wine coolers in the Phillippines.
Diageo plc (ADR) (NYSE:DEO) is the best buy of the bunch here with a lower trailing P/E of 18.25 and higher yield of 1.90%. Diageo has also underperformed the S&P 500 despite its defensive nature and dependability as a “sin” stock.
That said, it isn’t the pioneer in attracting the custom of women but it’s close on Beam’s high heels. Diageo has top brand share and better analyst sentiment with a median price target of $137.
Last call for alcohol!
BEAM Inc (NYSE:BEAM) may be the most exciting marketer to the female drinker, but it doesn’t have the advantage of size and reach that Diageo plc (ADR) (NYSE:DEO) has. Brown-Foreman is far behind these other two in the wooing of women. It’s also been the worst performer as a stock. If one’s your limit then Diageo is your stock.
The article Don’t Be Stingy With These Sin Stocks originally appeared on Fool.com and is written by AnnaLisa Kraft.
AnnaLisa Kraft has no position in any stocks mentioned. The Motley Fool recommends Beam and Diageo plc (NYSE:DEO) (ADR). AnnaLisa is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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