Earnings Miss: Budweiser Brewing Company APAC Limited Missed EPS By 14% And Analysts Are Revising Their Forecasts

There's been a notable change in appetite for Budweiser Brewing Company APAC Limited (HKG:1876) shares in the week since its yearly report, with the stock down 13% to HK$23.70. Revenues were in line with forecasts, at US$5.6b, although statutory earnings per share came in 14% below what the analysts expected, at US$0.039 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Budweiser Brewing Company APAC

Taking into account the latest results, the consensus forecast from Budweiser Brewing Company APAC's 18 analysts is for revenues of US$6.66b in 2021, which would reflect a solid 19% improvement in sales compared to the last 12 months. Per-share earnings are expected to leap 99% to US$0.077. In the lead-up to this report, the analysts had been modelling revenues of US$6.58b and earnings per share (EPS) of US$0.08 in 2021. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$3.79, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Budweiser Brewing Company APAC at US$35.99 per share, while the most bearish prices it at US$13.00. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. One thing stands out from these estimates, which is that Budweiser Brewing Company APAC is forecast to grow faster in the future than it has in the past, with revenues expected to grow 19%. If achieved, this would be a much better result than the 5.6% annual decline over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 13% per year. So it looks like Budweiser Brewing Company APAC is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Budweiser Brewing Company APAC. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at US$3.79, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Budweiser Brewing Company APAC. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Budweiser Brewing Company APAC analysts - going out to 2024, and you can see them free on our platform here.

Even so, be aware that Budweiser Brewing Company APAC is showing 1 warning sign in our investment analysis , you should know about...

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This article by Simply Wall St is general in nature. 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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