Ambev (NYSE: ABEV) and Anheuser-Busch Inbev SA (NYSE:BUD) are both large-cap consumer staples companies, but which is the better stock? We will compare the two businesses based on the strength of their dividends, analyst recommendations, valuation, earnings, risk, institutional ownership and profitabiliy.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Ambev and Anheuser-Busch Inbev SA, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ambev 0 3 2 0 2.40
Anheuser-Busch Inbev SA 1 8 10 0 2.47

Ambev currently has a consensus target price of $6.20, indicating a potential upside of 4.73%. Anheuser-Busch Inbev SA has a consensus target price of $122.50, indicating a potential upside of 7.67%. Given Anheuser-Busch Inbev SA’s stronger consensus rating and higher possible upside, analysts clearly believe Anheuser-Busch Inbev SA is more favorable than Ambev.

Profitability

This table compares Ambev and Anheuser-Busch Inbev SA’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ambev 27.04% 23.90% 14.23%
Anheuser-Busch Inbev SA 5.13% 18.35% 4.86%

Volatility and Risk

Ambev has a beta of 0.64, suggesting that its share price is 36% less volatile than the S&P 500. Comparatively, Anheuser-Busch Inbev SA has a beta of 1.06, suggesting that its share price is 6% more volatile than the S&P 500.

Dividends

Ambev pays an annual dividend of $0.12 per share and has a dividend yield of 2.0%. Anheuser-Busch Inbev SA pays an annual dividend of $3.07 per share and has a dividend yield of 2.7%. Ambev pays out 50.0% of its earnings in the form of a dividend. Anheuser-Busch Inbev SA pays out 227.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Anheuser-Busch Inbev SA has raised its dividend for 7 consecutive years. Anheuser-Busch Inbev SA is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

7.8% of Ambev shares are owned by institutional investors. Comparatively, 5.3% of Anheuser-Busch Inbev SA shares are owned by institutional investors. 4.5% of Anheuser-Busch Inbev SA shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Ambev and Anheuser-Busch Inbev SA’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Ambev $14.22 billion 6.54 $5.70 billion $0.24 24.67
Anheuser-Busch Inbev SA $49.04 billion 4.49 $18.47 billion $1.35 84.27

Anheuser-Busch Inbev SA has higher revenue and earnings than Ambev. Ambev is trading at a lower price-to-earnings ratio than Anheuser-Busch Inbev SA, indicating that it is currently the more affordable of the two stocks.

Summary

Anheuser-Busch Inbev SA beats Ambev on 11 of the 17 factors compared between the two stocks.

Ambev Company Profile

Ambev SA, formerly Inbev Participacoes Societarias SA, is a Brazil-based company engaged in the brewing sector. The Company produces and sells beer, carbonated soft drinks (CSDs) and other non-alcoholic and non-carbonated (NANC) beverages across the Americas. The Company’s activities are divided into three segments: Latin America North, including sell of beer, CSD and NANC drinks in Brazil, as well as operations in Dominican Republic, Saint Vincent, Antigua, Dominica, Guatemala, El Salvador, Nicaragua and Cuba; Latin America South, distributing products in Argentina, Bolivia, Paraguay, Uruguay, Chile, Ecuador, Peru and Colombia, and Canada, represented by Labatt’s operations, which comprises sales in Canada. The Company markets products under various brand names, such as Adriatica, Brahma, Leffe, Budweiser, Corona, PepsiCo and Lipton. It is a subsidiary of Interbrew International BV.

Anheuser-Busch Inbev SA Company Profile

Anheuser Busch Inbev NV (AB InBev) is a Belgium-based company engaged in the brewers industry. The Company owns a portfolio of over 200 beer brands. The Company’s brand portfolio includes global brands, such as Budweiser, Corona and Stella Artois; international brands, including Beck’s, Leffe and Hoegaarden, and local champions, such as Bud Light, Skol, Brahma, Antarctica, Quilmes, Victoria, Modelo Especial, Michelob Ultra, Harbin, Sedrin, Klinskoye, Sibirskaya Korona, Chernigivske, Cass and Jupiler. The Company’s soft drinks business consists of both own production and agreements with PepsiCo related to bottling and distribution arrangements between its various subsidiaries and PepsiCo. Ambev, which is a subsidiary of the Company, is a PepsiCo bottler. Brands that are distributed under these agreements are Pepsi, 7UP and Gatorade.

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