AmBev Soars to 52-week High Mark - Analyst Blog
28 January 2013 - 9:50PM
Zacks
Sturdy third quarter performance facilitated the shares of
Companhia de Bebidas Das Americas (ABV), alias
AmBev, to reach a new 52-week high of $45.84 on Friday, Jan 25,
beating its previous 52-week high of $45.62. This Zacks Rank #2
(Buy) Brazilian beer giant represented a healthy return of 14.9%
over the past six months. Average volume of shares traded over the
last 3 months stands at approximately 1,785,400.
Drivers that Triggered Momentum
An impressive third quarter beat, improved margins and strong
financial position are the attributes that pushed the shares of
AmBev to a new high.
AmBev reported robust third-quarter 2012 normalized earnings of
R$0.81 per share, substantially beating the prior-year quarter’s
earnings of R$0.53 by 52.6%. The results were primarily driven by
solid top-line performance, higher margins and lower tax rate. In
the U.S. dollar terms, earnings came at 39 cents per share, which
beat the Zacks Consensus Estimate of 35 cents.
Reported net sales increased 26.1% to R$8.036 billion compared with
R$6.375 billion in the prior-year quarter. The increase in revenues
was primarily attributable to a marginal hike of 1.5% in volumes
across all regions. On an organic basis, total revenue jumped 15.1%
from the prior-year quarter despite a 0.5% decline in overall
organic volume.
In spite of the input cost pressure, organic gross profit escalated
17.1% to R$5.414 billion compared with R$4.244 billion in the
year-ago quarter. Gross profit margin expanded 120 basis points
(bps) organically to 67.4%, primarily driven by margin expansion at
every business unit.
AmBev’s financial position remained strong at the end of the
quarter with cash and cash equivalents of R$4.531 billion and
shareholders’ equity of R$27.496 billion. The company generated
R$4.366 billion of cash from its operating activities. Moreover, it
paid a dividend and IOC of R$1.2 billion to its shareholders during
the quarter.
Besides AmBev, other beverage-alcohol companies like
Constellation Brands Inc. (STZ),
Brown-Forman Corporation (BF.B) and Beam
Inc. (BEAM) posted robust earnings results in the recently
reported quarters.
Stock’s Key Indicators
AmBev currently trades at a forward P/E of 25.2x, 41.7% above the
peer group average of 17.8x. Its price-to-sales ratio of 9.3x also
remains substantially higher than the peer group average of 3.1x.
Moreover, the company’s return-on-investment (ROI) and
return-on-asset (ROA) are 34.3% and 19.9%, respectively, which are
significantly higher than the peer group average.
AMBEV-PR ADR (ABV): Free Stock Analysis Report
BEAM INC (BEAM): Free Stock Analysis Report
BROWN FORMAN B (BF.B): Free Stock Analysis Report
CONSTELLATN BRD (STZ): Free Stock Analysis Report
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