Does Anheuser-Busch InBev Stock Have More Room For Growth?

BUD: Anheuser-Busch InBev logo
Anheuser-Busch InBev

Anheuser-Busch InBev stock (NYSE: BUD) has seen a rise of 3% in a month, compared with -4% returns for the broader S&P500 index. The company reported its Q4 results yesterday with a 3.3% rise in revenue. Sales growth was driven by better price realization, while the overall volume declined by 0.6%. Despite its recent rise, we believe BUD stock has more room for growth, and investors will likely see substantial gains in the long run.

Anheuser-Busch InBev’s revenue of $57.8 billion in 2022 reflected a 6% y-o-y rise, led by both price and volume gains. Total volume was up 2% in 2022. Looking at segments, Middle Americas, South America, and EMEA saw sales rise in double-digits, while North America and ASPAC sales grew in low single-digits.

Although the company’s normalized EBITDA margin contracted 126 bps in 2022, owing to higher costs, the metric should improve in 2023, partly due to better price realization. The company expects its EBITDA to grow between 4% and 8% in 2023. It reported earnings of $3.15 on a per share and adjusted basis for 2022, reflecting a 13% y-o-y growth. We have updated our model to reflect the latest results. We forecast sales to grow 8% to $62 billion in 2023, aided by favorable price realization. Middle Americas and South America should continue to do well, and the reopening of China will likely bolster overall top-line growth. We expect adjusted earnings to rise in the low teens in 2023.

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Looking at valuation, at its current level of $61, BUD stock is trading at a little under 17x its forward expected earnings of $3.68, compared to its last three-year average of about 20x, implying that it has more room for growth. We estimate Anheuser-Busch InBev’s Valuation to be around $69 per share, 13% above the current market price. This represents a 19x forward P/E multiple, close to its historical average mentioned above.

While BUD stock looks like it can see higher levels, it is helpful to see how other consumer defensive stocks fare on metrics that matter. You will find valuable comparisons for companies across industries at Peer Comparisons.

Furthermore, 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 PepsiCo vs. Atlas Air Worldwide.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Returns Mar 2023
MTD [1]
YTD [1]
Total [2]
 BUD Return 1% 2% -42%
 S&P 500 Return 0% 4% 78%
 Trefis Multi-Strategy Portfolio 1% 8% 241%

[1] Month-to-date and year-to-date as of 3/3/2023
[2] Cumulative total returns since the end of 2016

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