RBC Capital Markets upgraded its recommendation of beverage maker AB InBev, following the latter’s debt refinancing.
Shares of the world’s biggest beer company got upgraded to a top pick rating by RBC analyst James Edwardes Jones. Jones indicated that AB InBev’s debt is under control, especially after the company refinanced parts of it.
After AB InBev borrowed a record $75 billion to buy SABMiller in 2016, the former’s debt level peaked at $100 billion. In January, AB InBev issued $15.5 billion in corporate bonds to pay off some of the debt due for repayment between 2021 and 2024 as well as 2026. Jones said, "The recent refinancing was sensible," and added, "It has replaced peaks of debt repayment with a smoother schedule which, at current exchange rates, should be doable from free cash flow, while significant appreciation in the US$ would be manageable."
Jones also suggested that AB InBev’s valuation should be gauged by its price-to-earnings ratio (which is relatively less expensive in this case) versus its enterprise value/EBITDA (relatively expensive) ratio. He cited the beer company’s non-cyclicality as a reason.
Last year, AB InBev’s stock prices suffered declines, apparently due to concerns over the company’s decreasing beer sales coupled with its burgeoning debt.
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The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating well-balanced risk and returns. The average Profit vs. Risk Rating rating for the industry is 88, placing this stock slightly better than average.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. BUD’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is fair valued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is fair valued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (1.471) is normal, around the industry mean (4.028). P/E Ratio (23.500) is within average values for comparable stocks, (29.201). BUD's Projected Growth (PEG Ratio) (0.970) is slightly lower than the industry average of (2.099). Dividend Yield (0.014) settles around the average of (0.024) among similar stocks. P/S Ratio (2.114) is also within normal values, averaging (6.236).
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating slightly better than average sales and a considerably profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
a holding company whose subsidiaries manufactures and distributes alcoholic and non-alcoholic beverages
Industry BeveragesAlcoholic