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Will AB InBev (BUD) Repeat its Dismal Earnings Trend in Q4?
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Anheuser-Busch InBev SA/NV (BUD - Free Report) , alias AB InBev, is slated to release fourth-quarter 2016 results on Mar 2. The big question facing investors is, whether this leading alcohol-beverage company will be able to deliver a positive earnings surprise in the quarter to be reported.
Last quarter, the company had delivered a negative earnings surprise of 30.3%. In fact, it has underperformed the Zacks Consensus Estimate by an average of 13.8% in the trailing four quarters, with a negative surprise in three quarters. Let’s see how things are shaping up for this announcement.
AB InBev is on track with the integration of the recently acquired brewing giant SABMiller. The company is currently in the process of divesting SABMiller assets that it promised as part of the merger deal. Despite the divestitures, this combined mega-brewing company still holds the top spot in the beer industry, controlling about one-thirds of the global beer market. This behemoth accounts for nearly 30% of global beer sales and 46% of global beer profits.
However, the company has reported dismal earnings for three straight quarters now. In the last quarter, the company’s results were primarily hurt by a disappointing Brazilian performance, which in turn was marred by difficult consumer trends, tough year-over-year comparisons and unfavorable currency movements. Owing to the unpleasant Brazil scenario, the company also trimmed revenue guidance for 2016.
Further, the Zacks Consensus Estimates for the fourth quarter and 2016 have been witnessing a downtrend ahead of the company’s earnings release. Estimates have declined 22 cents to $1.03 per share for fourth-quarter and 9 cents to $3.65 per share for 2016. Together, these factors make us cautious of the upcoming results.
Moreover, this is reflected in AB InBev’s stock performance that has underperformed the broader industry in the last six months. The stock has declined 13.5% in the past six months, below the Zacks categorized Beverages–Alcoholic industry's fall of 6.7% in the same period.
Earnings Whispers
Our proven model does not conclusively show that AB InBev is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: Earnings ESP for AB InBev is currently pegged at -17.48%. This is because the Most Accurate estimate of 85 cents is below the Zacks Consensus Estimate of $1.03. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: AB InBev currently carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP. However, the company’s ESP of -17.48% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Costco Wholesale Corp. (COST - Free Report) , slated to report earnings on Mar 2, currently has an Earnings ESP of +0.74% and a Zacks Rank #3.
Staples Inc. , expected to release earnings on Mar 3, has an Earnings ESP of +4.00% and a Zacks Rank #3.
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Will AB InBev (BUD) Repeat its Dismal Earnings Trend in Q4?
Anheuser-Busch InBev SA/NV (BUD - Free Report) , alias AB InBev, is slated to release fourth-quarter 2016 results on Mar 2. The big question facing investors is, whether this leading alcohol-beverage company will be able to deliver a positive earnings surprise in the quarter to be reported.
Last quarter, the company had delivered a negative earnings surprise of 30.3%. In fact, it has underperformed the Zacks Consensus Estimate by an average of 13.8% in the trailing four quarters, with a negative surprise in three quarters. Let’s see how things are shaping up for this announcement.
Anheuser-Busch Inbev SA Price and EPS Surprise
Anheuser-Busch Inbev SA Price and EPS Surprise | Anheuser-Busch Inbev SA Quote
Factors Influencing This Quarter
AB InBev is on track with the integration of the recently acquired brewing giant SABMiller. The company is currently in the process of divesting SABMiller assets that it promised as part of the merger deal. Despite the divestitures, this combined mega-brewing company still holds the top spot in the beer industry, controlling about one-thirds of the global beer market. This behemoth accounts for nearly 30% of global beer sales and 46% of global beer profits.
However, the company has reported dismal earnings for three straight quarters now. In the last quarter, the company’s results were primarily hurt by a disappointing Brazilian performance, which in turn was marred by difficult consumer trends, tough year-over-year comparisons and unfavorable currency movements. Owing to the unpleasant Brazil scenario, the company also trimmed revenue guidance for 2016.
Further, the Zacks Consensus Estimates for the fourth quarter and 2016 have been witnessing a downtrend ahead of the company’s earnings release. Estimates have declined 22 cents to $1.03 per share for fourth-quarter and 9 cents to $3.65 per share for 2016. Together, these factors make us cautious of the upcoming results.
Moreover, this is reflected in AB InBev’s stock performance that has underperformed the broader industry in the last six months. The stock has declined 13.5% in the past six months, below the Zacks categorized Beverages–Alcoholic industry's fall of 6.7% in the same period.
Earnings Whispers
Our proven model does not conclusively show that AB InBev is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: Earnings ESP for AB InBev is currently pegged at -17.48%. This is because the Most Accurate estimate of 85 cents is below the Zacks Consensus Estimate of $1.03. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: AB InBev currently carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP. However, the company’s ESP of -17.48% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Best Buy Co. Inc. (BBY - Free Report) , scheduled to report earnings on Mar 1, currently has an Earnings ESP of +1.81% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Costco Wholesale Corp. (COST - Free Report) , slated to report earnings on Mar 2, currently has an Earnings ESP of +0.74% and a Zacks Rank #3.
Staples Inc. , expected to release earnings on Mar 3, has an Earnings ESP of +4.00% and a Zacks Rank #3.
A Full-Blown Technological Breakthrough in the Making
Zacks’ Aggressive Growth Strategist Brian Bolan explores autonomous cars in our latest Special Report, Driverless Cars: Your Roadmap to Mega-Profits Today. In addition to who will be selling them and how the auto industry will be impacted, Brian reveals 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>