Brown-Forman Corporation

The filings show a company with high gross margins and sound cash conversion, paired with softer top-line sales and a dense MD&A. The Beneish M-Score is -2.659, which the label places below -1.78 and not in the elevated manipulation-risk zone. In plain terms, this is a screening model that compares receivables, margins, asset quality, sales growth, depreciation, leverage and accruals against thresholds, and a score below -1.78 does not flag the company for a closer read on that basis. The Altman Z-double-prime Score is 6.30, in the safe zone, which indicates low modeled bankruptcy risk for a non-financial company; it says nothing about sales trends. The Piotroski F-Score is 7 of 9 computable signals, meaning seven of the nine computable profitability, leverage and efficiency tests passed, a relatively favorable reading. The Fog Index of 19.19 is in the very hard to read band. Operating cash flow of $1 billion against net income of $715 million gives a ratio of 1.40 for fiscal 2026. Long-term debt fell to $2.08 billion from $2.42 billion, and total liabilities of $3.87 billion compare with assets of $7.89 billion. The risk factors name the Jack Daniel's family of brands, tariff and trade policy, shifts in consumer preference away from brown spirits, and a dual-class controlled-company structure in which the Brown family owns more than 50% of voting stock. The MD&A points to specific drags: the end of the Korbel relationship, the Non-branded and bulk line down 61% on lower used-barrel sales, and declines of 11% in Germany, 14% in France and 16% in Spain. Readers may want to look at these items alongside the Non-GAAP reconciliation and the fiscal 2026 10-K, since the scores reflect fiscal 2026 while the MD&A covers the first quarter of fiscal 2027.

Catalyst.Per the MD&A for the three months ended July 31, 2026, net sales were $911 million, down 1%, as unfavorable price/mix and the end of the Korbel relationship outweighed higher volumes and favorable foreign exchange. Growth came from New Mix, up 48% reported on higher volumes in Mexico and a United States launch, and from Mexico overall, up 26%. Ready-to-Drink rose 20%. Gross margin widened to 60.2% from 59.8%, and diluted earnings per share rose 6% to $0.38, helped by lower non-operating postretirement expense. For fiscal 2026, revenue was $3.93 billion, down from $3.98 billion in fiscal 2025.

Hidden risk.Reported and organic figures tell different stories at the operating line: reported operating income fell 3% to $252 million, while organic operating income rose 4%. The bridge between those measures sits in the Non-GAAP section, which this excerpt does not include, so readers may want to check it before weighing the gap. Concentration is also material. The United States was 42% of fiscal 2026 net sales, U.S. net sales fell 3% this quarter, and the risk factors name dependence on the Jack Daniel's family of brands and tariff changes. The Fog Index of 19.19 places the MD&A in the very hard to read band, which may make these reconciliations harder to follow.