Expansion Of BEES Platform And Premium Brands Will Strengthen Future Market Position

Key Takeaways

• Strategic priorities and premiumization efforts drive global momentum, likely boosting future revenue and enhancing efficiencies, net margins, and EBITDA growth.
  
• Market share gains and a share buyback program reflect confidence in cash flow, supporting future earnings growth and shareholder value.
  
• Strong competition and economic challenges in multiple regions may pressure Anheuser-Busch InBev's revenue and market share, with potential risks from raw material costs.

Catalysts

Produces, distributes, exports, markets, and sells beer and beverages.

• AB InBev's execution of strategic priorities, including investments in mega brands and premiumization, is driving global momentum and expected revenue growth in over 60% of markets, likely boosting future revenue.
  
• The company's ongoing optimization and digitization efforts, such as the expansion of its BEES platform and a shift towards premium and super premium products, are improving efficiencies and margins, potentially enhancing net margins and EBITDA growth.
  
• Market recovery in the U.S., driven by gains in market share with brands like Michelob ULTRA and Busch Light, coupled with strategic investments in spirits-based RTDs, could spur future earnings growth and revenue gains.
  
• The announced $2 billion share buyback program is expected to increase EPS by reducing the share count, reflecting confidence in ongoing cash flow and strengthening shareholder value.
  
• Continued premiumization and adaptability in diverse markets, such as coping with softer conditions in China while leveraging opportunities in growing segments like non-alcohol beer, support long-term revenue and margin expansion strategies.

Anheuser-Busch InBev Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Anheuser-Busch InBev's revenue will grow by 3.0% annually over the next 3 years.
• Analysts assume that profit margins will increase from 11.0% today to 12.7% in 3 years time.
• Analysts expect earnings to reach $8.3 billion (and earnings per share of $4.33) by about February 2028, up from $6.5 billion today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $7.2 billion.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 20.0x on those 2028 earnings, up from 15.3x today. This future PE is greater than the current PE for the GB Beverage industry at 18.6x.
• Analysts expect the number of shares outstanding to grow by 1.02% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 5.89%, as per the Simply Wall St company report.

Anheuser-Busch InBev Future Earnings Per Share Growth

Risks

• The operating environment remained dynamic in some markets, with a soft consumer environment in China and Argentina leading to an overall volume decline of 2.4%, which might negatively impact future revenues.
  
• Growth in the Middle Americas was affected by adverse weather and economic slowdowns in certain countries, impacting revenue stability and potential earnings.
  
• In the U.S., while the beer industry showed resilience, there is strong competition in both low-end and premium segments, which could pressure market share and impact revenue growth.
  
• APAC saw significant revenue decline in China due to softer consumer demand, particularly affecting the on-premise channel, suggesting possible continued revenue challenges in this significant market.
  
• Although cost pressures are expected to normalize, any unexpected increases in raw materials like aluminum could impact net margins if price adjustments cannot keep pace.

Valuation

• The analysts have a consensus price target of €66.302 for Anheuser-Busch InBev based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €86.6, and the most bearish reporting a price target of just €52.85.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $64.9 billion, earnings will come to $8.3 billion, and it would be trading on a PE ratio of 20.0x, assuming you use a discount rate of 5.9%.
  
• Given the current share price of €48.9, the analyst price target of €66.3 is 26.2% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.