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Brown-Forman At Bubble Valuation Levels; Get Out Now

Shares of spirit maker Brown-Forman (BF.B) have been quite stagnant for the past year or so following a terrific rally that saw shares move up almost 50%. The company has seen strong EPS growth as margins and revenue have expanded in that time frame but the period of consolidation that has persisted for about a year now has me thinking; is BF.B expensive now? Some cracks in the armor have appeared and in this article, I'll take a look at the company's stock to see if it may be time to get out.

(click to enlarge)

To do this, I'll use a DCF-type model you can read more about here. The model uses inputs including earnings estimates from Yahoo!, dividends, which I've estimated will grow at 7% annually and a discount rate, which I've set at the 10 year Treasury rate plus a risk premium of 6.5%.

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