Can AB InBev (BUD) Beat on Q3 Earnings on Premium Portfolio
Anheuser-Busch InBev SA/NV BUD, also known as AB InBev, is slated to release third-quarter 2023 earnings on Oct 31. The leading alcohol beverage company is likely to register year-over-year revenue and earnings growth when it reports third-quarter 2023 results.
The Zacks Consensus Estimate for AB InBev’s third-quarter revenues is pegged at $15.8 billion, suggesting 4.5% growth from the year-ago quarter’s reported number. For third-quarter earnings, the consensus mark is pegged at 86 cents per share, suggesting 6.2% growth from the prior-year reported figure. The consensus estimate has moved down 4.4% in the past 30 days.
In the last reported quarter, the company delivered an earnings surprise of 9.1%. Its earnings beat the Zacks Consensus Estimate by 12.7%, 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 a continued business momentum due to relentless execution, investment in its brands and accelerated digital transformation. The company has been benefiting from its unique commercial strategy, a strong brand portfolio and investments in operation excellence. These have been aiding market share growth across most key markets. Continued resilience in the global beer category is also expected to have aided the third-quarter performance.
BUD 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 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.
AB InBev is anticipated to have benefited from continued premiumization efforts and favorable industry trends in the third quarter. The company has been investing in 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 of portfolio. These factors are likely to have boosted the company’s top line in the third 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 the 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.
BUD’s revenue-management initiatives and premiumization efforts are likely to have aided revenues per hl in the third 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 bottom line is expected to have been marred by adverse currency translations, commodity cost inflation and higher supply-chain costs in some markets. Higher commodity costs have mainly been resulting from increased aluminum and barley prices. BUD’s presence across various countries exposes it to negative currency translations.
On the last reported quarter’s earnings call, management expected higher commodity costs to keep exerting pressure on input costs, which is likely to have been partly offset by the easing of supply-chain headwinds. The company also anticipated volatile foreign currency. Additionally, higher operating expenses (SG&A expenses), owing to increased sales and marketing investments, have been headwinds for the past few quarters.
Our model predicts SG&A expenses, as a percentage of sales, to increase 60 bps year over year to 29.4% in the third quarter. We anticipate the normalized EBIT to decline 50 bps to 26.4% in the third quarter.
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 -1.45%.
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.
e.l.f. Beauty ELF currently has an Earnings ESP of +0.42% and sports a Zacks Rank #1. The company is expected to register year-over-year top and bottom-line growth when it reports second-quarter fiscal 2024 results. The Zacks Consensus Estimate for e.l.f. Beauty’s quarterly revenues is pegged at $197.3 million, calling for growth of 61.2% from the figure reported in the prior-year quarter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for ELF’s quarterly EPS is pegged at 54 cents, indicating an improvement of 50% from the year-ago quarter. e.l.f. Beauty has an earnings surprise of 108.3% in the last reported quarter.
Church & Dwight Co. CHD currently has an Earnings ESP of +2.21% and a Zacks Rank #3. The company’s top line is expected to increase year over year when it reports third-quarter 2023 results. The Zacks Consensus Estimate for CHD’s quarterly revenues is pegged at $1.43 billion, suggesting a rise of 8.7% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Church & Dwight’s quarterly EPS is pegged at 68 cents, which indicates a 10.5% decline from the year-ago reported figure. CHD has a trailing four-quarter earnings surprise of 12.1%, on average.
Monster Beverage MNST currently has an Earnings ESP of +1.98% and a Zacks Rank #3. MNST is likely to register year-over-year top and bottom-line growth when it reports the third-quarter 2023 numbers. The Zacks Consensus Estimate for its quarterly revenues is pegged at $1.86 billion, which suggests growth of 14.7% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Monster Beverage’s quarterly earnings is pegged at 40 cents per share, suggesting an increase of 33.3% from the year-ago quarter’s reported number. MNST has delivered an earnings beat of 2.2%, on average, in the trailing four quarters.
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Church & Dwight Co., Inc. (CHD) : Free Stock Analysis Report
Anheuser-Busch InBev SA/NV (BUD) : Free Stock Analysis Report
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