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Things You Need to Know Before AB InBev's (BUD) Q2 Earnings

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Anheuser-Busch InBev SA/NV (BUD - Free Report) , also known as AB InBev, is slated to release second-quarter 2019 results on Jul 25. In the last reported quarter, its earnings were in line with the Zacks Consensus Estimate.

However, the company recorded average negative surprise of 7.6% in the trailing four quarters. The Zacks Consensus Estimate for its earnings in the second quarter is pegged at $1.13, suggesting growth of 2.7% from the year-ago quarter. Moreover, estimates remained unchanged in the last 30 days.

The Zacks Consensus Estimate for total revenues of $13.7 billion indicates a decline of 2.5% from the year-ago quarter. While the company has been witnessing improving trends in key markets and continued premiumization in most of its markets, higher marketing expenses and soft beer sales in the United States remain deterrents to top and bottom-line growth.

Anheuser-Busch InBev SA/NV Price and EPS Surprise

 

Anheuser-Busch InBev SA/NV Price and EPS Surprise

Anheuser-Busch InBev SA/NV price-eps-surprise | Anheuser-Busch InBev SA/NV Quote

How Things Are Shaping Up for This Announcement

AB InBev looks well poised for second-quarter 2019 results, backed by strong sales trend, persistent strength in global brands and a robust outlook for 2019. Improving trends in key markets and continued premiumization in the majority of its markets are likely to continue aiding top-line performance in the upcoming quarterly release. Additionally, the company has delivered solid results for its three global brands — Budweiser, Corona and Stella Artois — in the past few quarters. Strength in global brands reflects the company’s potential to grow in the quarters ahead.

Furthermore, the company anticipates delivering strong top-line and EBITDA growth for 2019, backed by solid brand performance and robust commercial plans. Driven by increased focus on category development, it expects to deliver balanced top-line growth between volume and revenue per hl. Net revenue per hl growth is likely to exceed inflation while costs (sum of cost of sales and SG&A) are expected to be below inflation. Premiumization and revenue management initiatives are likely to aid revenue per hl growth.

However, some of the company’s key markets, particularly Argentina and South Africa, continue to suffer from tough macroeconomic conditions, leading to lower consumer demand. In South Africa, revenues declined in a mid-single digit in the first quarter due to lower volume, stemming from the shift of the Easter holiday to the second quarter alongside a decline in consumer demand. Ongoing macroeconomic challenges and a continued segment mix shift toward the premium segment (where the region still has lower market share) impacted consumer demand.

In Argentina, volume declined in the mid-teens in the first quarter due to the difficult macroeconomic environment. Continued impacts from these soft market conditions may hamper the company’s top and bottom-line growth in the to-be-reported quarter.

Additionally, like most of its peers, the company continues to witness softness in beer sales, particularly in the United States, as consumers gravitate toward wine and other healthier options. Major consumer trends, such as premiumization, health and wellness, and demographic changes in the population are causing a mix shift within the beer segment. This might be a deterrent to top-line growth in the upcoming release.

What the Zacks Model Unveils

Our proven model does not conclusively predict earnings beat for AB InBev this quarter. 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’s Earnings ESP of 0.00% and Zacks Rank #3 (Hold) make surprise prediction difficult.

Stocks Poised to Beat Earnings Estimates

Here are some companies that you may want to consider as our model shows that these have the right combination of elements to deliver an earnings beat:

e.l.f. Beauty Inc. (ELF - Free Report) has an Earnings ESP of +29.41% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kimberly-Clark Corporation (KMB - Free Report) has an Earnings ESP of +0.69% and a Zacks Rank of 2.

Church & Dwight Co., Inc. (CHD - Free Report) has an Earnings ESP of +1.22% and a Zacks Rank #2.

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