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Factors Likely to Decide the Fate of AB InBev (BUD) in Q3

Commodity cost inflation, adverse currency and higher SG&A expenses are expected to have hurt AB InBev (BUD) in Q3. Strong brand portfolio and digital growth are likely to have aided.

This story originally appeared on Zacks

Anheuser-Busch InBev SA/NV BUD, also known as AB InBev, is slated to release third-quarter 2021 earnings on Oct 28. The leading alcohol beverage company is likely to register year-over-year revenue growth when it reports third-quarter 2021 results. The Zacks Consensus Estimate for AB InBev’s third-quarter revenues is pegged at $13.42 billion, suggesting 4.7% growth from the year-ago quarter.

For third-quarter revenues, the consensus mark is pegged at 64 cents per share, suggesting a 19% decline from the prior-year reported figure. The consensus estimate has moved down 25.6% in the past 30 days.

In the last reported quarter, the company delivered a negative earnings surprise of 21.5%. Its earnings missed the Zacks Consensus Estimate by 5.3%, on average, in the trailing four quarters.

- Zacks

AnheuserBusch InBev SANV Price and EPS Surprise


AnheuserBusch InBev SANV Price and EPS Surprise

AnheuserBusch InBev SANV price-eps-surprise | AnheuserBusch InBev SANV Quote

Key Factors to Note

AB InBev has been witnessing pressures from commodity cost inflation and adverse currency, which partly weighed on EBITDA. Negative transactional currency and higher commodity costs mainly related to increased aluminum and barley prices have been concerning.

In the last reported quarter, management predicted the higher commodity costs environment to continue in the third quarter, exerting pressure on input costs. The company’s presence across various countries is likely to have exposed it to negative currency translations in the to-be-reported quarter.

Higher SG&A expenses, attributed to increased variable compensation accruals and marketing investments, are also expected to have hurt the bottom line in the to-be-reported quarter.

However, the company’s unique commercial strategy, strong brand portfolio, digital investments and operational excellence are likely to have aided market share growth across the majority of the key markets. This is expected to have partly cushioned the top and bottom lines in the to-be-reported quarter. Strength in the off-premise channel and premium brands, and investment in B2B platforms, e-commerce channels and digital marketing in the past few months have been the key growth drivers.

Continued resilience in the global beer category is also expected to have aided the sales performance in the to-be-reported quarter.

Zacks Model

Our proven model doesn’t conclusively predict an earnings beat for AB InBev this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

AB InBev has a Zacks Rank #5 and Earnings ESP of 0.00%.

Stocks Poised to Beat Earnings Estimates

Here are some companies that you may want to consider as our model shows that these have the right combination of elements to deliver an earnings beat.

Corteva, Inc. CTVA has an Earnings ESP of +7.89% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Estee Lauder Companies Inc. EL currently has an Earnings ESP of +0.24% and a Zacks Rank #3.

Tyson Foods, Inc. TSN has an Earnings ESP of +19.13% and a Zacks Rank #3 at present.

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