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AB InBev (BUD) Surpasses Sales & Earnings Estimates in Q1

·5 min read

Anheuser-Busch InBev SA/NV BUD, alias AB InBev, reported better-than-anticipated sales and earnings in first-quarter 2022 and improved year over year. The company’s results reflected continued business momentum, owing to relentless execution, investment in its brands and accelerated digital transformation. Backed by the continued business momentum, it retained its upbeat view for 2022.

AB InBev 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. More than 50% of the company’s revenues are now generated through the B2B digital platforms, with the monthly user base of its proprietary B2B brand, BEES, reaching 2.7 million.

Shares of the Zacks Rank #3 (Hold) company have lost 2.9% year to date compared with the industry’s decline of 5%.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Q1 Highlights

AB InBev reported normalized earnings per share of 67 cents, rising from 51 cents in the year-ago quarter. However, the bottom line beat the Zacks Consensus Estimate of 60 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 60 cents in first-quarter 2022, down 9.1% from 55 cents earned in the year-ago quarter.

Revenues of $13,235 million improved 7.7% from the year-ago quarter and beat the Zacks Consensus Estimate of $12,964 million. It registered an organic revenue growth of 11.1%, primarily driven by robust volume and revenue per hectoliter (hl) growth. Revenues were driven by the strong performance of its three global brands — Budweiser, Corona and Stella Artois — which advanced 6% outside their home markets in the first quarter.

Revenues per hl were up 7.8% on an organic basis, backed by revenue management and premiumization efforts. The total organic volume grew 2.8%, with a 2.2% increase in the own-beer volume and 6% growth in the non-beer volume.

The company remains focused on expanding its Beyond Beer portfolio, which has also been aiding the top line. Notably, the Beyond Beer portfolio contributed $350 million to total revenues in the quarter.

The cost of sales increased 14.2% on a reported but the metric declined 16.8% organic basis to $5,989 million in the first quarter.

The company’s normalized earnings before interest, taxes, depreciation and amortization (EBITDA) were $4,486 million, which rose 5.1% year over year and 7.4% on an organic basis. However, the normalized EBITDA margin contracted 80 basis points (bps) to 33.9% and dipped 115 bps organically. EBITDA margins were impacted by commodity headwinds, as well as higher supply-chain costs in some markets. This more than offset the rise in revenues.

SG&A expenses increased 1.4% year over year to $4,116 million and 6.3% on an organic basis. Higher SG&A expenses can be attributed to elevated supply-chain costs.

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

Outlook

For 2022, AB InBev expects EBITDA growth in line with the medium-term outlook of 4-8%. It anticipates revenue growth to be higher than EBITDA growth, driven by strong volume and pricing.

The company expects net pension interest expenses and accretion expenses of $170-$200 million, based on currency and interest rate fluctuations. It anticipates an average gross debt coupon of 4% for 2022.

Management anticipates a normalized effective tax rate of 28-30% for 2022. Net capital expenditure is projected to be $4.5-$5 billion for 2022, driven by higher investments in innovation and other consumer-centric initiatives to fuel the ongoing momentum.

Stocks to Consider

We highlighted some better-ranked stocks from the broader Consumer Staples space, namely The Duckhorn Portfolio NAPA, McCormick & Company MKC and Sysco Corporation SYY.

McCormick is one of the leading manufacturers, marketers and distributors of spices, seasonings, specialty foods and flavors. It also currently carries a Zacks Rank #2 (Buy). It has an expected long-term earnings growth rate of 6.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for McCormick’s current financial-year sales and EPS suggests growth of 5% and 3.9%, respectively, from the year-ago period’s reported figures. MKC has a trailing four-quarter earnings surprise of 7.3%, on average.

Duckhorn, a premier producer of wines in North America, currently has a Zacks Rank #2 and an expected long-term earnings growth rate of 11.3%. NAPA has a trailing four-quarter earnings surprise of 122.4%, on average.

The Zacks Consensus Estimate for Duckhorn’s current financial-year sales and earnings per share suggests growth of 9.6% and 3.5%, respectively, from the year-ago reported numbers. The consensus mark for NAPA’s earnings per share has been unchanged in the past 30 days.

Sysco, the marketer and distributor of food and related products, currently has a Zacks Rank #2. SYY has a trailing two-quarter earnings surprise of 93.75%, on average. It has an expected long-term earnings growth rate of 11%. The company has a trailing four-quarter earnings surprise of 3.7%, on average.

The Zacks Consensus Estimate for Sysco’s current financial-year sales and earnings per share suggests growth of 35.9% and 145.5%, respectively, from the year-ago reported numbers. The consensus mark for SYY’s earnings per share has been unchanged in the past 30 days.


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McCormick & Company, Incorporated (MKC) : Free Stock Analysis Report

AnheuserBusch InBev SANV (BUD) : Free Stock Analysis Report

Sysco Corporation (SYY) : Free Stock Analysis Report

The Duckhorn Portfolio, Inc. (NAPA) : Free Stock Analysis Report

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