BF-B

Brown-Forman owns one of the most valuable spirits franchises in the world (Jack Daniel's, Woodford Reserve), and its quality shows in the margin structure: 60.5% gross margin, 25.5% operating margin and a 17.8% return on equity in FY2026 (year ended April 30, 2026). The balance sheet is sound, with $4.02B of equity against modest leverage (0.96x liabilities/equity) and long-term debt cut 14.0% to $2.08B. Operating cash flow surged 67.2% to $1.00B, comfortably funding the $427M dividend (+1.7%) and $400M of buybacks.

The problem is the trajectory. Revenue slipped 1.2% to $3.93B — flat versus FY2022's $3.93B, meaning four years of no top-line progress — and net income fell 17.7% to $715M with diluted EPS down 16.8% to $1.53, as the global spirits category works through a demand and destocking downturn. Operating income declined 9.6% to $1.00B, so the margin profile, while still elite, is eroding at the bottom line.