At R$14.59, Is Ambev S.A. (BVMF:ABEV3) Worth Looking At Closely?

Ambev S.A. (BVMF:ABEV3) saw a double-digit share price rise of over 10% in the past couple of months on the BOVESPA. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s take a look at Ambev’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Ambev

What is Ambev worth?

According to my valuation model, Ambev seems to be fairly priced at around 15% below my intrinsic value, which means if you buy Ambev today, you’d be paying a fair price for it. And if you believe that the stock is really worth R$17.08, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, Ambev’s low beta implies that the stock is less volatile than the wider market.

Can we expect growth from Ambev?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by 23% over the next couple of years, the future seems bright for Ambev. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? ABEV3’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on ABEV3, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Ambev.

If you are no longer interested in Ambev, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.