Anheuser-Busch InBev stock (NYSE: BUD) has seen a fall of 10% in a month, while it’s down 21% this year. This compares with -5% and -17% returns for the broader S&P500 index over the same periods, respectively. This underperformance can partly be attributed to a 3.4% volume decline for the North American region (its largest segment) in the first half of 2022, weighing on Anheuser-Busch InBev’s Revenue growth.
Furthermore, rising inflation and higher oil prices don’t bode well for Anheuser-Busch InBev, given their impact on consumer spending. For instance, people earning less than $50,000 annually in the U.S. cut their spending by 1% over the last year.  Higher inflation and supply chain disruptions also affected Anheuser-Busch InBev’s overall performance in the recent past. That said, the company’s Q2 results were better than the street estimates, aided by pricing growth, a trend expected to continue in the near term.
From a stock valuation perspective, we find BUD to be undervalued currently. We estimate Anheuser-Busch InBev Valuation to be $63 per share, reflecting a significant 31% upside from its current levels of $48. At its current levels, BUD stock is trading at under 16x its expected forward earnings of $3.07 on a per share and adjusted basis, compared to the last two-year average of 22x.
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- What’s Behind Anheuser-Busch InBev Stock’s Recent Decline?
But what about BUD stock return in the near term?
Now that BUD stock has seen a 10% fall in a month, will it continue its downward trajectory, or is a rise imminent? Going by historical performance, there is a low chance of an increase in BUD stock over the next month. BUD stock has seen a move of -10% or more 173 times in the last ten years. Of those, only 76 resulted in BUD stock rising over the subsequent one-month period (twenty-one trading days). This historical pattern reflects 76 out of 173, or a 44% chance of a rise in BUD stock over the coming month. See our analysis on Anheuser-Busch InBev Stock Chance of Rise for more details.
Calculation of ‘Event Probability‘ and ‘Chance of Rise‘ using the last ten years’ data
- After moving -6.5% or more over five days, the stock rose on 57% of the occasions in the next five days.
- After moving -10.0% or more over ten days, the stock rose in the next ten days on 50% of the occasions
- After moving -9.8% or more over a twenty-one-day period, the stock rose on 44% of the occasions in the next twenty-one days.
This pattern suggests a higher chance of a rise in BUD stock over the next five days, an equal chance of a rise or a fall in the next ten days, and a low chance of an increase over the next month.
Anheuser-Busch InBev (BUD) Stock Return (Recent) Comparison With Peers And S&P500
- Five-Day Return: KO highest at -4.1%; TAP lowest at -7.7%
- Ten-Day Return: KO highest at -4.9%; SAM lowest at -11.6%
- Twenty-One Days Return: KO highest at -3.0%; SAM lowest at -10.8%
Although BUD stock looks undervalued, the historical pattern suggests even better levels may be available to enter over the next month or so.
The Covid-19 crisis has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised at how counter-intuitive the stock valuation is for Starbucks vs. Commercial Metals.
|S&P 500 Return||0%||-17%||77%|
|Trefis Multi-Strategy Portfolio||0%||-16%||233%|
 Month-to-date and year-to-date as of 9/2/2022
 Cumulative total returns since the end of 2016