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Cramer Dissects Brown-Forman’s Earnings

Friday, 8 Jun 2012 | 6:45 PM ET

On Friday, “Mad Money” host Jim Cramer set out to explain why he thinks Brown-Forman’s earnings results weren’t nearly as bad as the headlines made it sound.

Bottles are filled with Woodford Reserve bourbon whiskey on the production line at the company's distillery in Versailles, Kentucky.
John Sommers II | Bloomberg | Getty Images
Bottles are filled with Woodford Reserve bourbon whiskey on the production line at the company's distillery in Versailles, Kentucky.

“While the headline numbers looked ugly, all the underlying trends were strong, with many of them coming in much, much better-than-expected,” Cramer said. “Brown-Forman's like a book with a really unappealing cover, but if you just bother to open the thing and read the first page, you'd see that it's actually really great.”

The liquor company’s organic sales, for example, rose by 10 percent in the fourth-quarter. Most analysts had only expected organic sales in the single digits, Cramer noted.

Cramer Explains Brown Forman's Quarter
Mad Money host Jim Cramer gets to the bottom of Brown Forman's international success.

Brown-Forman’s net income fell by 37 percent, but Cramer pointed out that its operating income rose by 13 percent, where most analysts had only expected a 10 percent increase.

So why were many of the headlines that chronicled Brown-Forman’s earnings seemingly negative? Cramer explained that there were a lot of non-operating items that affected the results, which are hard to work into a headline. Its earnings took an 11-cent hit from foreign exchange rates as a stronger dollar meant their overseas profits translated into fewer dollars – that’s just too complicated to condense or explain in a headline, Cramer said.

“This quarter was too complicated to be captured by a headline,” Cramer said. “But if you took the time to go through the results, you could see why Brown-Forman deserved to rally, and in my opinion, it isn't done.”

Call Cramer: 1-800-743-CNBC

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