BF.B – Market expectations are for Uniform ROA to expand to new peaks, but management may be concerned about e-commerce, down-trading, and Jack Daniel’s

• Brown-Forman Corporation (BF.B:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 45.7x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may be concerned about the e-commerce channel, their ability to mitigate down-trading in their portfolio, and their Jack Daniel’s brand
• Specifically, management may lack confidence in their ability to grow the e-commerce channel and improve the spirit-based ready-to-drink (RTD) market in the U.S. Moreover, they may be downplaying the impact of down-trading on their portfolio and they might have concerns about their ability to continue investing effectively in advertising and SG&A. Furthermore, they may be concerned about their new Woodford Reserve ads, the new releases from the Jack Daniel’s brand, and the performance of Jack Daniel’s Tennessee Whiskey going forward. In addition, they may be exaggerating New Mix as their number one growth driver and the potential sales of tequila and whiskey. Finally, management may be concerned about the travel retail business’ ability to recover