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Will AB InBev (BUD) Dismal Earnings Trend Continue in Q4?

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Anheuser-Busch InBev SA/NV (BUD - Free Report) , also known as AB InBev, is slated to release fourth-quarter 2017 results on Mar 1. Last quarter, the company reported a negative earnings surprise of 12.7%.

In fact, AB InBev has been missing estimates for the last seven quarters. It recorded an average negative surprise of 28.4% in the trailing four quarters. Let’s see how things are shaping up prior this announcement.

What to Expect

The Zacks Consensus Estimate for the quarter under review is pegged at $1.10 per share, reflecting year-over-year growth of 155.8%. Moreover, the estimate has been stable in the last 30 days. Analysts polled by Zacks anticipate total revenues of 14.5 billion, which reflects growth of 2.2% year over year.

 

Anheuser-Busch Inbev SA Price and EPS Surprise

 

Anheuser-Busch Inbev SA Price and EPS Surprise | Anheuser-Busch Inbev SA Quote

 

Additionally, the AB InBev stock has been witnessing a downtrend lately, mainly due to the dismal performance. The stock has declined 7.2% in the last three months, wider than the industry’s 1.6% fall. This reflects that the market has been bearish on the stock in the recent past.

 



 

Factors at Play

AB InBev has put up a dismal show lately as it continues to battle soft volumes, higher cost of sales, adverse currency impacts and consumers’ changing preferences. Management believes that cost of sales will continue to rise, owing to the lingering currency woes and growth of premium brands. Management also anticipates that some of its core regions will remain volatile. These factors are likely to dent the company’s performance.

Further, consumers’ shifting preference toward booming craft spirits in the United States might take a toll on the growth of the company’s Budweiser brand. Apparently, in the last quarter, Budweiser brand’s revenues fell 2.2%.

However, AB InBev’s robust brand portfolio and solid geographical reach remain its major strength. Further, given the rising demand for craft beer space, we expect the company to benefit from its constant expansion in this category. Also, it keeps introducing near-beer alternatives along with no- and low-alcohol beers, which is encouraging.

Though the expansion might take time, we believe that AB InBev will return to its growth trajectory backed by its strength of Budweiser brand and robust initiatives.

What the Zacks Model Unveils?

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 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

AB InBev has an Earnings ESP of 0.00% and a Zacks Rank #3. While the company’s Rank increases the predictive power of ESP, we need to have a positive ESP to be confident about an earnings surprise.

Stocks Poised to Beat Earnings Estimates

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:

Dillard’s, Inc. (DDS - Free Report) has an Earnings ESP of +15.83% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ross Stores, Inc. (ROST - Free Report) has an Earnings ESP of +1.37% and a Zacks Rank #1.

Dollar Tree, Inc. (DLTR - Free Report) has an Earnings ESP of +1.99% and a Zacks Rank #2.

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