Bear of the Day: Anheuser-Busch InBev (BUD)

Not long ago, the alcoholic beverage industry underwent major changes. Huge companies, once rivals, found themselves merged together. The conglomerates were taking over the industry. All while smaller craft breweries were popping up all around America, meeting demand for higher-end beers. Now that the dust has settled, some of these behemoths are having trouble delivering the type of growth they originally thought possible.

Today’s Bear of the Day is Anheuser-Busch InBev (BUD). Anheuser-Busch InBev SA/NV, a brewing company, engages in the production, distribution, and sale of beer, alcoholic beverages, and soft drinks worldwide. It offers a portfolio of approximately 500 beer brands, including Budweiser, Corona, and Stella Artois; Beck's, Castle, Castle Lite, Hoegaarden, and Leffe; and Aguila, Antarctica, Bud Light, Brahma, Cass, Chernigivske, Cristal, Harbin, Jupiler, Klinskoye, Michelob Ultra, Modelo Especial, Quilmes, Victoria, Sedrin, Sibirskaya Korona, and Skol.

The stock is current a Zacks Rank #5 (Strong Sell). The recent for the unfavorable Zacks Rank is the dip in earnings estimates coming from analysts. For the current quarter, two analysts have dropped their estimates over the last thirty days. Over the same period, four analysts have cut their estimates for the current year. The bearish moves have cut the current quarter Zacks Consensus Estimate from $1.39 to $1.15 while the current year’s number has dipped from $5.18 to $4.72.

Despite that negative move in earnings estimates, the company is still slated to show some solid growth for the quarter. Current quarter EPS growth is expected to come in at 21.05%. However, next quarter’s numbers are projected to slow to only 76 bps of growth. That sort of slow down may be what’s brought the stock down from its highs.

The alcoholic beverage industry ranks in the Bottom 40% of our Zacks Industry Rank. Investors looking for other ideas within the same industry should take a closer look at Zacks Rank # 1 (Strong Buy) Kirin Holdings (KNBWY) and Zacks Rank #2 (Buy) The Boston Beer Company (SAM).

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