Anheuser-Busch InBev SA/NV (BUD - Free Report) is slated to release second-quarter 2016 results on Jul 29. Last quarter, the company had delivered a negative earnings surprise of 41.4%. In fact, it has underperformed the Zacks Consensus Estimate by an average of 12.4% over the trailing four quarters, with a negative surprise in three quarters. Let’s see how things are shaping up for this announcement.
Factors Influencing This Quarter
After sending out positive signals at the end of 2015, this Budweiser owner succumbed to an earnings miss yet again in the first quarter of 2016, wherein its results lagged expectations. While the company remains well placed to gain from the boom in the craft beer segment and its pending merger with SABMiller plc , we cannot ignore the fact that volume growth may be slightly impacted by the entry of new participants in the craft beer segment, which is currently the hottest-selling beer category.
Further, management outlined its view for 2016 – where on the one hand, it expects organic net revenue per hectoliter (on a constant geographic basis) to grow ahead of inflation, based on its continued initiatives and a better mix. On the other hand, however, the company expects a hike in cost of goods sold per hectoliter, owing to unfavorable currency impact and growth of its premium brands.
With all these factors at play, we would like to wait and see what’s in store for AB InBev in the quarter to be reported.
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 -1.84%. This is because the Most Accurate estimate of $1.07 stands below the Zacks Consensus Estimate of $1.09.
Zacks Rank: AB InBev carries a Zacks Rank #5 (Strong Sell). 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:
Jack in the Box Inc. (JACK - Free Report) , expected to report earnings on Aug 3, currently has an Earnings ESP of +1.15% and a Zacks Rank #2 (Buy).
Hibbett Sports, Inc. (HIBB - Free Report) , expected to report earnings on Aug 19, currently has an Earnings ESP of +3.70% and a Zacks Rank #2.
Dick's Sporting Goods Inc. (DKS - Free Report) , expected to report earnings on Aug 16, currently has an Earnings ESP of +5.97% and a Zacks Rank #3 (Hold).
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