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ABEV - Ambev: Rich Valuation Disconnected From Fundamentals
Ambev S.A. American Depositary Shares
Ambev's (ABEV) latest quarter shone a brighter light on the uncertainties around its outlook as the company's exposure to on-premise demand could see it suffer a significant impact through COVID-19. This comes on the heels of an intensifying competitive backdrop, which has pressured Ambev's EBITDA heading into 2020. Net, I think the extent of Ambev's headwinds drives increased uncertainty around a potential recovery path, with current valuations at c. 17x GAAP P/E creating an unfavorable risk/reward dynamic for investors.
Resilient Top-Line But Margin Deterioration Continues
Ambev's top-line was surprisingly resilient at -0.3% Y/Y