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AB InBev (BUD) Surpasses Q1 Earnings & Revenue Estimates

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Anheuser-Busch InBev SA/NV BUD, alias AB InBev, is off to a strong start to 2021, with robust first-quarter 2021 results. Notably, its top and bottom lines beat the Zacks Consensus Estimate and improved on a year-over-year basis in the first quarter. The company’s results benefited from its unique commercial strategy, strong brand portfolio, investments in digital platform and operation excellence, which led to market share growth across the majority of the key markets.

The better-than-expected top-line results demonstrated the company’s fundamental strength as well as continued resilience in the global beer category. Notably, its beer business reported 2.8% volume growth in first-quarter 2021 compared with first-quarter 2019, reflecting strong growth versus the pre-pandemic levels. This growth came despite heightened COVID-led impacts like on-premise restrictions across markets as well as a one-month ban imposed on the sale of alcohol in South Africa.

The company remains keen on making the most of investments in its portfolio over the years as well as rapidly growing its digital platform, including BEES and Zé Delivery.

Overall, shares of the Zacks Rank #4 (Sell) company have risen 8.5% in the past three months compared with the industry’s growth of 5.6%.

Q1 Highlights

The company reported normalized earnings per share of 51 cents against a loss per share of 42 cents reported in the year-ago quarter. Moreover, the bottom line beat the Zacks Consensus Estimate of 48 cents.

Underlying earnings per share (normalized EPS, excluding mark-to-market gains and losses related to the hedging of share-based payment programs and the impacts of hyperinflation) were 55 cents in first-quarter 2021, up 7.8% from 51 cents earned in the year-ago quarter.

Revenues of $12,293 million improved 11.7% from the year-ago quarter and surpassed the Zacks Consensus Estimate of $11,494 million. It registered an organic revenue growth of 17.2% primarily on ongoing premiumization and revenue-management initiatives. Notably, revenues per hectoliter (hl) were up 3.7%. Moreover, the company notes that revenues in the first quarter were ahead of the pre-pandemic levels, mostly driven by a 2.8% rise in beer volume when compared with the first quarter of 2019.

Total organic volume grew 13.3%, with a 14.9% increase in own-beer volume and 4% growth in non-beer volume. The company’s premium portfolio reported revenue growth of 28% in the first quarter, reflecting more than 30% of its total revenues. This was driven by elevated profit per hl compared with its core brands.

AnheuserBusch InBev SANV Price, Consensus and EPS Surprise

AnheuserBusch InBev SANV Price, Consensus and EPS Surprise
AnheuserBusch InBev SANV Price, Consensus and EPS Surprise

AnheuserBusch InBev SANV price-consensus-eps-surprise-chart | AnheuserBusch InBev SANV Quote

Consolidated revenues at its three global brands — Budweiser, Corona and Stella Artois — advanced 29.5% globally and 46.4% outside their respective home markets in the first quarter.

The cost of sales increased 14.7% to $5,243 million and was up 20.6% on an organic basis.

The company’s normalized earnings before interest, taxes, depreciation and amortization (EBITDA) were $4,267 million, which rose 8.1% year over year and 14.2% on an organic basis. This growth is mainly attributed to positive brand mix and ongoing cost discipline, partly negated by adverse currency translations and headwinds from commodity, channel and packaging mix. Additionally, higher SG&A expenses, owing to higher variable compensation accruals, hurt EBITDA.

However, normalized EBITDA margin contracted 120 basis points (bps) to 34.7% and declined 91 bps organically.

2021 Outlook

For 2021, AB InBev expects normalized EBITDA growth of 8-12%, with revenue growth expected to be higher than EBITDA growth, driven by strong volume and pricing.

Management anticipates effective tax rate of 28-30% for 2021, higher than that reported in 2020. The year-over-year increase relates to the phasing out of the temporary COVID-19 measures and changes in tax attributes in some key markets. Net capital expenditure is projected to be $4.5-$5 billion for 2021, driven by higher investments in innovation and other consumer-centric initiatives to fuel the ongoing momentum.

3 Better-Ranked Beverage Stocks

Compania Cervecerias Unidas, S.A. CCU has an expected long-term earnings growth rate of 10.2%. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Coca-Cola FEMSA S.A.B. de C.V. KOF has an expected long-term earnings growth rate of 14.1%. It currently carries a Zacks Rank #2 (Buy).

Fomento Economico Mexicano S.A.B. de C.V. FMX has a Zacks Rank #2 at present. It has an expected long-term earnings growth rate of 9.3%.

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Fomento Economico Mexicano S.A.B. de C.V. (FMX) : Free Stock Analysis Report

AnheuserBusch InBev SANV (BUD) : Free Stock Analysis Report

Coca Cola Femsa S.A.B. de C.V. (KOF) : Free Stock Analysis Report

Compania Cervecerias Unidas, S.A. (CCU) : Free Stock Analysis Report

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