Diageo PLC (DEO) & Brown Forman Corporation (BF.A) Critical Contrast

Brown Forman Corporation (NYSE: BF.A) and Diageo PLC (NYSE:DEO) are both large-cap consumer staples companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, institutional ownership, risk, analyst recommendations, dividends, valuation and profitabiliy.

Analyst Ratings

This is a breakdown of current ratings and price targets for Brown Forman Corporation and Diageo PLC, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Brown Forman Corporation 1 0 0 0 1.00
Diageo PLC 3 3 5 0 2.18

Diageo PLC has a consensus target price of $120.00, indicating a potential downside of 1.43%.

Profitability

This table compares Brown Forman Corporation and Diageo PLC’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Brown Forman Corporation 17.29% 51.93% 14.35%
Diageo PLC N/A N/A N/A

Valuation & Earnings

This table compares Brown Forman Corporation and Diageo PLC’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Brown Forman Corporation N/A N/A N/A $1.70 N/A
Diageo PLC $14.48 billion 5.28 $4.64 billion N/A N/A

Diageo PLC has higher revenue and earnings than Brown Forman Corporation.

Dividends

Brown Forman Corporation pays an annual dividend of $0.73 per share. Diageo PLC pays an annual dividend of $3.03 per share and has a dividend yield of 2.5%. Brown Forman Corporation pays out 42.9% of its earnings in the form of a dividend. Diageo PLC has increased its dividend for 5 consecutive years. Diageo PLC is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Brown Forman Corporation has a beta of 1, suggesting that its stock price has a similar volatility profile to the S&P 500.Comparatively, Diageo PLC has a beta of 0.77, suggesting that its stock price is 23% less volatile than the S&P 500.

Insider & Institutional Ownership

5.3% of Brown Forman Corporation shares are held by institutional investors. Comparatively, 12.1% of Diageo PLC shares are held by institutional investors. 26.9% of Brown Forman Corporation shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Diageo PLC beats Brown Forman Corporation on 7 of the 12 factors compared between the two stocks.

Brown Forman Corporation Company Profile

Brown-Forman Corporation is a spirit and wine company. The Company manufactures, bottles, imports, exports, markets and sells a range of alcoholic beverages. The Company has a portfolio of approximately 40 spirit, wine and ready-to-drink cocktail (RTD) brands. Its principal brands include Jack Daniel’s Tennessee Whiskey, Jack Daniel’s RTDs, Jack Daniel’s Tennessee Honey, Gentleman Jack Rare Tennessee Whiskey, Jack Daniel’s Tennessee Fire, Jack Daniel’s Single Barrel Collection, Jack Daniel’s Sinatra Select, Jack Daniel’s Winter Jack, Jack Daniel’s No. 27 Gold Tennessee Whiskey, Finlandia Vodkas, Finlandia RTDs, Korbel California Brandy, Woodford Reserve Kentucky Bourbons, el Jimador Tequilas, el Jimador New Mix RTDs, Herradura Tequilas, Canadian Mist Canadian Whisky, Sonoma-Cutrer California Wines, Early Times Kentucky Whisky and Bourbon, Chambord Liqueur, Old Forester Kentucky Bourbon, Antiguo Tequila, Pepe Lopez Tequila, Santa Dose Cachaca and Collingwood Canadian Whisky.

Diageo PLC Company Profile

Diageo PLC is an alcoholic beverage company. The Company operates in various categories, including spirits and beer. Its geographic segments include North America; Europe, Russia and Turkey; Africa; Latin America and Caribbean, and Asia Pacific. Its principal products includes Scotch whisky, Gin, Vodka, Rum, Beer, Irish Cream Liqueur, Wine, Raki, Tequila, Canadian Whisky, American Whiskey, Progressive Adult Beverages, Cachaca, Brandy and Ready to Drink. The Company’s brands includes Johnnie Walker, Smirnoff, Captain Morgan, Baileys, Tanqueray and Guinness. It manages its operations from various locations, including the United Kingdom; Ireland; Italy; Turkey; the United States; Canada; Brazil; Mexico; Australia; Singapore; India; Nigeria; South Africa; East Africa, and Africa Regional Markets. It also produces a range of ready to drink products mainly in the United Kingdom, Italy, South Africa, Australia, the United States and Canada.

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