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AB InBev (BUD) Q4 Earnings and Revenues Surpass Estimates
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Anheuser-Busch InBev SA/NV (BUD - Free Report) , alias AB InBev, reported fourth-quarter 2017 results, wherein both the top and bottom line outpaced the Zacks Consensus Estimate and improved year over year. In fact, the quarter marked earnings beat after seven consecutive negative surprises while revenues surpassed estimates after two straight misses.
However, shares of AB InBev have lost 8% in the past three months, wider than the industry's decline of 0.7%.
Q4 Highlights
Normalized earnings per share of $1.04 increased substantially from 43 cents in the year-ago quarter backed by higher operating profits. Also, the bottom line came ahead the Zacks Consensus Estimate of 98 cents.
Revenues were up 2.8% to $14,600 million, surpassing the Zacks Consensus Estimate of $14,508 million. The company registered organic revenue growth of 8.2% courtesy of a 6.7% rise in revenues per hectoliter (hl) on a constant geographic basis. The increase stemmed from ongoing revenue management and premiumization initiatives that bolstered the performance of its global brands, particularly outside their home markets. Also, revenues per hl advanced 6.6% on a reported basis.
Consolidated revenues at the company’s three global brands — Budweiser, Corona and Stella Artois — improved 17.8% in the reported quarter.
Total volumes grew 1.6% in the quarter. While beer volumes rose 2.3%, non-beer volumes fell 3.6% in the same time period.
Cost of sales dropped 4.5% year over year to $5,166 million, while organically the same rose 4.6%. Further, organic cost of sales per hl grew 3.2%. On a constant geographic basis, cost of sales per hl increased 3.3%.
The company’s normalized earnings before interest, taxes, depreciation and amortization (EBITDA) came in at $6,189 million, up 17.9% year over year and grew 21% on an organic basis. This improvement was driven by persistent synergy capture and top-line growth. EBITDA margin expanded 540 basis points (bps) to 42.4% while the same increased 446 bps organically.
AB InBev issued guidance for 2018. Though management sees volatility in certain key markets, it anticipates delivering strong top-line growth for the full year backed by solid brands performance and robust commercial plans. In fact, driven by the company’s growth model that focuses on category development, net revenue per hl growth is likely to exceed inflation while costs are expected to come below inflation. However, the company envisions a soft first quarter owing to a difficult comparable, and phasing of marketing and sales initiatives.
Nonetheless, this Zacks Rank #3 (Hold) company reiterated the synergy and cost-savings guidance of $3.2 billion. It expects to achieve synergies of more than $1 billion in the next 2-3 years.
For 2018, management anticipates normalized effective tax rate in the range of 24-26%. Net capital expenditures are projected between $4 billion and $4.5 billion. AB InBev envisions dividend growth to be modest in future.
Craft Brew Alliance has pulled off an average positive earnings surprise of 250.2% in the trailing four quarters.
Sysco with a long-term earnings growth rate of 10.1% has delivered an average positive earnings surprise of 1.1% in the last four quarters.
United Natural Foods has a long-term earnings per share growth rate of 6.2%.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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AB InBev (BUD) Q4 Earnings and Revenues Surpass Estimates
Anheuser-Busch InBev SA/NV (BUD - Free Report) , alias AB InBev, reported fourth-quarter 2017 results, wherein both the top and bottom line outpaced the Zacks Consensus Estimate and improved year over year. In fact, the quarter marked earnings beat after seven consecutive negative surprises while revenues surpassed estimates after two straight misses.
However, shares of AB InBev have lost 8% in the past three months, wider than the industry's decline of 0.7%.
Q4 Highlights
Normalized earnings per share of $1.04 increased substantially from 43 cents in the year-ago quarter backed by higher operating profits. Also, the bottom line came ahead the Zacks Consensus Estimate of 98 cents.
Revenues were up 2.8% to $14,600 million, surpassing the Zacks Consensus Estimate of $14,508 million. The company registered organic revenue growth of 8.2% courtesy of a 6.7% rise in revenues per hectoliter (hl) on a constant geographic basis. The increase stemmed from ongoing revenue management and premiumization initiatives that bolstered the performance of its global brands, particularly outside their home markets. Also, revenues per hl advanced 6.6% on a reported basis.
Consolidated revenues at the company’s three global brands — Budweiser, Corona and Stella Artois — improved 17.8% in the reported quarter.
Total volumes grew 1.6% in the quarter. While beer volumes rose 2.3%, non-beer volumes fell 3.6% in the same time period.
Cost of sales dropped 4.5% year over year to $5,166 million, while organically the same rose 4.6%. Further, organic cost of sales per hl grew 3.2%. On a constant geographic basis, cost of sales per hl increased 3.3%.
The company’s normalized earnings before interest, taxes, depreciation and amortization (EBITDA) came in at $6,189 million, up 17.9% year over year and grew 21% on an organic basis. This improvement was driven by persistent synergy capture and top-line growth. EBITDA margin expanded 540 basis points (bps) to 42.4% while the same increased 446 bps organically.
Anheuser-Busch Inbev SA Price and Consensus
Anheuser-Busch Inbev SA Price and Consensus | Anheuser-Busch Inbev SA Quote
Outlook
AB InBev issued guidance for 2018. Though management sees volatility in certain key markets, it anticipates delivering strong top-line growth for the full year backed by solid brands performance and robust commercial plans. In fact, driven by the company’s growth model that focuses on category development, net revenue per hl growth is likely to exceed inflation while costs are expected to come below inflation. However, the company envisions a soft first quarter owing to a difficult comparable, and phasing of marketing and sales initiatives.
Nonetheless, this Zacks Rank #3 (Hold) company reiterated the synergy and cost-savings guidance of $3.2 billion. It expects to achieve synergies of more than $1 billion in the next 2-3 years.
For 2018, management anticipates normalized effective tax rate in the range of 24-26%. Net capital expenditures are projected between $4 billion and $4.5 billion. AB InBev envisions dividend growth to be modest in future.
Three Hot Picks in the Consumser StaplesSpace
Some better-ranked stocks in the broader Consumer Staples are Craft Brew Alliance, Inc. , Sysco Corporation SYY and United Natural Foods, Inc. (UNFI - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Craft Brew Alliance has pulled off an average positive earnings surprise of 250.2% in the trailing four quarters.
Sysco with a long-term earnings growth rate of 10.1% has delivered an average positive earnings surprise of 1.1% in the last four quarters.
United Natural Foods has a long-term earnings per share growth rate of 6.2%.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>