Is Now The Time To Look At Buying Ambev S.A. (BVMF:ABEV3)?

Today we're going to take a look at the well-established Ambev S.A. (BVMF:ABEV3). The company's stock saw a decent share price growth in the teens level on the BOVESPA over the last few months. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s examine Ambev’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Ambev

What's the opportunity in Ambev?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 13% below my intrinsic value, which means if you buy Ambev today, you’d be paying a reasonable price for it. And if you believe the company’s true value is R$17.67, then there’s not much of an upside to gain from mispricing. What's more, Ambev’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What kind of growth will Ambev generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. 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? It seems like the market has already priced in ABEV3’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on ABEV3, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect 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.

If you'd like to know more about Ambev as a business, it's important to be aware of any risks it's facing. You'd be interested to know, that we found 1 warning sign for Ambev and you'll want to know about it.

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.