Can AB InBev (BUD) Beat Earnings in Q4 Amid Elevated Costs?
Anheuser-Busch InBev SA/NV BUD, also known as AB InBev, is slated to release fourth-quarter 2023 earnings on Feb 29. The leading alcohol beverage company is likely to register year-over-year revenue growth when it reports fourth-quarter 2023 results.
The Zacks Consensus Estimate for AB InBev’s fourth-quarter revenues is pegged at $15.3 billion, suggesting 4.6% growth from the year-ago quarter’s reported number. For fourth-quarter earnings, the consensus mark is pegged at 76 cents per share, suggesting 22.5% decline from the prior-year reported figure. The consensus estimate has been unchanged in the past 30 days.
The Zacks Consensus Estimate for 2023 revenues is pegged at $60.3 billion, indicating growth of 4.3% from the figure reported in the year-ago quarter. The consensus mark for earnings is pegged at $2.99 per share, which suggests a decline of 6.9% from the year-ago quarter’s reported figure. The consensus mark has been unchanged in the past 30 days.
In the last reported quarter, the company’s earnings per share were in line with the Zacks Consensus Estimate. Its earnings beat the Zacks Consensus Estimate by 11.7%, on average, in the trailing four quarters.
Anheuser-Busch InBev SA/NV Price and EPS Surprise
Anheuser-Busch InBev SA/NV price-eps-surprise | Anheuser-Busch InBev SA/NV Quote
Key Factors to Note
AB InBev’s top line has been reflecting continued business momentum for its brand portfolio. The company’s pricing actions, ongoing premiumization and other revenue management initiatives have also been aiding its revenues. Relentless execution, investment in its brands and accelerated digital transformation have been boosting market share growth across most key markets. Continued resilience in the global beer category is also expected to have aided the fourth-quarter performance.
On the last reported quarter’s earnings call, management predicted the positive business trends would continue throughout 2023. It anticipated revenue growth to be higher than EBITDA growth in 2023, driven by strong volume and pricing.
We estimate 5.1% revenue growth in 2023. Our model estimates revenue per hl to increase 4.2% year over year, with volume growth of 0.9%.
AB InBev is anticipated to have benefited from continued premiumization efforts and favorable industry trends in the fourth quarter. The company has been focused on offering premium beer variants, keeping on track with the consumer premiumization trend in the alcohol industry. It has been investing to develop a diverse portfolio of global, international, and crafts and specialty premium brands in its markets. Apart from the premium brands, BUD’s global brands lead the way in premiumization. These factors are likely to have boosted the company’s top line in the fourth quarter.
The rapid expansion of its digital platform and leveraging technology, such as B2B sales and other e-commerce platforms, have been the key drivers for BUD. The company has been witnessing an acceleration in B2B platforms, e-commerce and digital marketing trends, aiding growth for the past few months. These are expected to have contributed significantly to the top and bottom lines in the to-be-reported quarter.
AB InBev has been steadfastly growing its Beyond Beer portfolio, including ready-to-drink beverages like canned wine and canned cocktails, hard seltzers, cider and flavored malt beverages. The Beyond Beer trend has recently been gaining popularity due to the increased demand for low-alcoholic or non-alcoholic drinks. The company has been focused on expanding its Beyond Beer portfolio, which has also been aiding the top line.
The company’s revenue-management initiatives and premiumization efforts are likely to have aided revenues per hl in the fourth quarter. Growth in the premium portfolio and the expansion of the Beyond Beer portfolio are expected to have driven volume gains in the to-be-reported quarter.
However, AB InBev’s fourth-quarter results are expected to reflect the continued impacts of elevated costs stemming from commodity cost inflation and investments to support long-term growth. These are expected to have weighed on the company’s EBITDA margin in the to-be-reported quarter.
Our model predicts the cost of sales to increase 2.6% for the fourth quarter and 4.7% for 2023. In dollar terms, SG&A expenses are expected to increase 3% year over year in the fourth quarter and 4.6% in 2023. The SG&A expense rate is anticipated to be flat year over year at 30.4% in 2023.
On the last reported quarter’s earnings call, AB InBev expected year-over-year EBITDA growth of 4-8% for 2023, in line with its medium-term outlook. Our model anticipates normalized EBITDA to increase 4.6% year over year in 2023. We expect a normalized EBITDA margin of 34.4% in 2023, up 10 bps year over year.
Zacks Model
Our proven model doesn’t conclusively predict an earnings beat for AB InBev this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
AB InBev has a Zacks Rank #3 and an Earnings ESP of 0.00%.
Stocks Poised to Beat Earnings Estimates
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to deliver an earnings beat.
Inter Parfums IPAR has an Earnings ESP of +5.71% and a Zacks Rank of 2 at present. The company is slated to witness top-line growth when it reports fourth-quarter 2023 results. The Zacks Consensus Estimate for IPAR’s quarterly revenues is pegged at $329 million, which suggests growth of 5.9% from the figure reported in the year-ago quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Inter Parfums’ quarterly earnings has moved up 9.4% in the past 30 days to 35 cents per share. However, the consensus mark for earnings suggests a decline of 5.7% from the year-ago quarter’s reported number. IPAR has delivered an earnings surprise of 45.7%, on average, in the trailing four quarters.
Monster Beverage MNST has an Earnings ESP of +10.03% and a Zacks Rank of 3 at present. The company is expected to report top and bottom-line growth when it reports fourth-quarter 2023 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $1.75 billion, which suggests growth of 15.9% from the figure reported in the year-ago quarter.
The Zacks Consensus Estimate for Monster Beverage’s quarterly earnings has remained unchanged in the past 30 days at 39 cents per share. The consensus mark for earnings suggests growth of 34.5% from the year-ago quarter’s reported number. MNST has delivered an earnings surprise of 1.9%, on average, in the trailing four quarters.
Vita Coco Company COCO has an Earnings ESP of +15.38% and a Zacks Rank of 3 at present. The company is expected to witness top and bottom-line growth when it reports fourth-quarter 2023 results. The Zacks Consensus Estimate for COCO’s quarterly earnings has remained unchanged in the past 30 days at 9 cents per share. The consensus mark for earnings suggests 125% growth from that reported in the year-ago quarter.
The Zacks Consensus Estimate for Vita Coco’s quarterly revenues is pegged at $98 million, which indicates growth of 6.5% from the figure reported in the year-ago quarter. COCO has delivered an earnings surprise of 25.7%, on average, in the trailing four quarters.
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Vita Coco Company, Inc. (COCO) : Free Stock Analysis Report
Anheuser-Busch InBev SA/NV (BUD) : Free Stock Analysis Report
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Monster Beverage Corporation (MNST) : Free Stock Analysis Report
