Brown-Forman B (BF.B) Surges 5.5%: Is This an Indication of Further Gains?

Brown-Forman B (BF.B) shares ended the last trading session 5.5% higher at $28.9. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 1.2% loss over the past four weeks.

The Brown-Forman shares moved higher after the company disclosed that it had received an unsolicited acquisition proposal from privately held spirits company Sazerac. Although Brown-Forman’s board, supported by its controlling shareholder group, Wolf Pen Branch, determined that the proposal was “not actionable” and reaffirmed its commitment to remaining independent, investors viewed the disclosure as highlighting the company’s strategic value. The announcement also fueled speculation that a higher bid or renewed acquisition interest could emerge in the future. Management reiterated confidence in its long-term growth strategy, brand portfolio, geographic expansion and operational initiatives aimed at enhancing shareholder value.

This company is expected to post quarterly earnings of $0.38 per share in its upcoming report, which represents a year-over-year change of +5.6%. Revenues are expected to be $922.86 million, down 0.1% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Brown-Forman B, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on BF.B going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Brown-Forman B is part of the Zacks Beverages - Alcohol industry. Molson Coors Brewing (TAP), another stock in the same industry, closed the last trading session 3.4% higher at $42.51. TAP has returned 3.5% in the past month.

For Molson Coors, the consensus EPS estimate for the upcoming report has changed -0.5% over the past month to $1.52. This represents a change of -25.9% from what the company reported a year ago. Molson Coors currently has a Zacks Rank of #4 (Sell).

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This article originally published on Zacks Investment Research (zacks.com).

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