Anheuser-Busch InBev (ENXTBR:ABI) Profit Margin Rises to 12.2%, Reinforcing Bullish Valuation Narratives

Anheuser-Busch InBev (ENXTBR:ABI) posted a net profit margin of 12.2% for the most recent period, a jump from last year’s 9.9%. Over the past five years, the company has averaged 24.5% annual earnings growth, with current-year earnings up 20%. Although this is not as rapid as previous years, it is still growing. With analysts forecasting another 10.03% per year in earnings growth and the stock trading well below consensus fair value estimates, investors are likely to see the current combination of sustained profitability and favorable valuation as key drivers in ABI’s latest report.

See our full analysis for Anheuser-Busch InBev.

Now that we have the headline figures, let’s see how they compare to the bigger-picture narratives shaping investor sentiment around Anheuser-Busch InBev.

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Purple-chip Premiumization Outpaces Beer Volumes

• Premium and no- and low-alcohol brands, including megabrands like Corona and a 33% surge in non-alcoholic beer revenue, have led to higher revenue per hectoliter and margin expansion, even as some key emerging markets saw weaker volume growth.
• Analysts’ consensus view notes that premiumization, digital transformation, and innovation in alternatives are giving ABI an edge.
  • They also flag ongoing demand softness in major emerging markets like China and Brazil, where volumes have yet to recover despite revenue gains.
  • This mix shift towards premium and innovation supports the positive outlook for margin durability, but also exposes ABI to changing consumer preferences and market risk.
• Curious how these strategies could shape ABI’s long-term story? Discover the full Consensus Narrative for more context.📊 Read the full Anheuser-Busch InBev Consensus Narrative.

Cost Efficiencies Propel Margin Gains

• EBITDA margin increased by 116 basis points in Q2, a direct result of operational optimizations, disciplined resource allocation, and robust productivity initiatives, even with persistent cost and FX headwinds.
• Analysts’ consensus view highlights that digital and operational efficiency investments are helping to offset headwinds.
  • This margin boost is material given the backdrop of only modest revenue growth (forecast at 5% annually) and ongoing cost pressures.
  • Despite these gains, further upside depends on continued success in driving cost out and managing currency and commodity risk, which remains a watchpoint for analysts.

Valuation Discount Relative to DCF and Peers

• ABI’s current price-to-earnings ratio is 16.5x, below the peer group average of 22.6x, but nearly identical to the broader European beverage industry at 16.4x. DCF fair value is estimated at €141.31 per share versus a market price of €51.86, representing over a 60% discount on that basis.
• According to the analysts’ consensus view, the current share price trades 24.5% below the analyst price target of €68.68, suggesting the market is still skeptical about the sustainability of margin and revenue trends.
  • They emphasize that consensus price targets reflect an expectation that margins will climb to 14.3% and earnings per share will reach $5.09 by 2028.
  • With financial leverage still over 3x net debt to EBITDA, it remains an open debate whether ABI can close the valuation gap without a bigger improvement in its balance sheet.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Anheuser-Busch InBev on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

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A great starting point for your Anheuser-Busch InBev research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

See What Else Is Out There

Despite margin improvements, ABI’s substantial financial leverage and ongoing debate over its balance sheet strength remain obstacles to closing its valuation gap.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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