2024-05-17 12:37:45 ET
Summary
- Anheuser-Busch InBev's Q1 FY24 results showed continued strength among core brands and an increasing focus on premium beer consumption by consumers.
- Total revenues grew 2.6% YoY with operational improvements leading to real bottom-line growth and organic sales growth.
- However, the recent rally in BUD shares has eliminated some upside potential, with the stock only 9% undervalued at present time.
- Anheuser-Busch InBev still faces real risk from competitive pressures, supply side inflation and some cyclicality in demand.
- Hold Rating issued (downgrade).
Investment Thesis
Anheuser-Busch InBev SA/NV ( BUD ) produced a solid set of Q1 FY24 results which suggest the brewer's core brands and shifting focus on premium beers is working well for the firm.
Since my last coverage of BUD back in September, where I rated them a Strong Buy, the brewer has been focusing on growing unit profitability through a combination of top-line revenue growth and operational efficiency improvements.
While total volumes did decline in Q1, solid operational improvements led to margin expansion, while 2.65% YoY organic sales growth was achieved thanks to consumers purchasing more premium beer from the brewery....
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Anheuser-Busch InBev Produces Solid Q1 Results, Yet The Stock Now Appears Fairly Priced (Downgrade)