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GuruFocus has detected 5 Warning Signs with Brown-Forman Corp $BF.B.
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Brown-Forman Corp (NYSE:BF.B)
Intrinsic Value: Projected FCF
$14.79 (As of Today)

Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value: DCF (FCF Based), or Discounted Earnings Intrinsic Value: DCF (Earnings Based) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Free Cash Flow and Book Value of the company. The details of how we calculate the intrinsic value of stocks are described in detail here.

As of today, Brown-Forman Corp's projected FCF intrinsic value is $14.79. The stock price of Brown-Forman Corp is $49.16. Therefore, Brown-Forman Corp's Price to Intrinsic Value: Projected FCF Ratio of today is 3.3.

BF.B' s Price-to-Intrinsic-Value-Projected-FCF Range Over the Past 10 Years
Min: 1.04   Max: 3.32
Current: 3.32

1.04
3.32

During the past 13 years, the highest Price to Intrinsic Value: Projected FCF Ratio of Brown-Forman Corp was 3.32. The lowest was 1.04. And the median was 1.90.

BF.B's Price-to-Intrinsic-Value-Projected-FCF is ranked lower than
68% of the 112 Companies
in the Global Beverages - Wineries & Distilleries industry.

( Industry Median: 2.01 vs. BF.B: 3.32 )

Definition

Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value: DCF (FCF Based), or Discounted Earnings Intrinsic Value: DCF (Earnings Based) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Free Cash Flow and Book Value of the company.

The details of how we calculate the intrinsic value of stocks are described in detail here.

This method smooths out the free cash flow over the past 6-7 years, multiplies the results by a growth multiple, and adds a portion of total equity.

Value = ((Growth Multiple)*Free Cash Flow(6 year avg) + 0.8*Total Equity(most recent))/Shares Outstanding

In the case of negative total equity, the following formula is used (see the Total Equity section for the reason):

Value = ((Growth Multiple)*Free Cash Flow(6 year avg) + Total Equity(most recent)/0.8)/Shares Outstanding


Here Brown-Forman Corp's FCF(6 year avg) is calculate as

Brown-Forman Corp Quarterly Data

201501201504201507201510201601201604201607201610201701201704
total_freecashflow 272204108-132635611121240152
201207201210201301201304201307201310201401201404201407201410
total_freecashflow 7056182132687316021981-74
201107201110201201201204
total_freecashflow 5079172147

Add all the Free Cash Flow together and divide 6 will get Brown-Forman Corp's FCF(6 year avg) = $471.50.

Brown-Forman Corp's Intrinsic Value: Projected FCF for today is calculated as

Intrinsic Value=(Growth Multiple*Free Cash Flow(6 year avg)+Total Equity(Apr17)*0.8)/Shares Outstanding
=(10.0568367669*471.5+1370*0.8)/386.756
=15.09

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


Explanation

The growth multiple is capped between 8.35 and 17.74.

Total equity weighting is more art than science and it should always be revisited in more detail when researching a company. Weightings from 0% to 100% to more than 100% are possible. 80% was chosen as a happy medium after taking the above ideas into consideration. Learn more here.

Brown-Forman Corp's Price to Intrinsic Value: Projected FCF Ratio for today is calculated as

Price to Intrinsic Value: Projected FCF=Share Price/Intrinsic Value: Projected FCF
=49.16/15.0942675371
=3.26

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


Related Terms

Intrinsic Value: DCF (Earnings Based), Intrinsic Value: DCF (FCF Based), Free Cash Flow


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Brown-Forman Corp Annual Data

Apr08Apr09Apr10Apr11Apr12Apr13Apr14Apr15Apr16Apr17
Projected FCF 9.3710.0913.4614.5915.1413.9315.6415.0114.7414.86

Brown-Forman Corp Quarterly Data

Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17Apr17
Projected FCF 16.0715.0113.3313.8714.2314.7413.6314.1314.8314.86
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