Should You Investigate Budweiser Brewing Company APAC Limited (HKG:1876) At HK$21.20?

By
Simply Wall St
Published
November 18, 2021
SEHK:1876
Source: Shutterstock

Let's talk about the popular Budweiser Brewing Company APAC Limited (HKG:1876). The company's shares saw a decent share price growth in the teens level on the SEHK 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. However, could the stock still be trading at a relatively cheap price? Let’s examine Budweiser Brewing Company APAC’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Budweiser Brewing Company APAC

What is Budweiser Brewing Company APAC worth?

According to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average, the stock currently looks expensive. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Budweiser Brewing Company APAC’s ratio of 41.65x is above its peer average of 26.75x, which suggests the stock is trading at a higher price compared to the Beverage industry. Furthermore, Budweiser Brewing Company APAC’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach levels around its industry peers, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

What kind of growth will Budweiser Brewing Company APAC generate?

earnings-and-revenue-growth
SEHK:1876 Earnings and Revenue Growth November 19th 2021

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 70% over the next couple of years, the future seems bright for Budweiser Brewing Company APAC. 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? 1876’s optimistic future growth appears to have been factored into the current share price, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe 1876 should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on 1876 for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive outlook is encouraging for 1876, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

Since timing is quite important when it comes to individual stock picking, it's worth taking a look at what those latest analysts forecasts are. At Simply Wall St, we have the analysts estimates which you can view by clicking here.

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

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