For those of us who enjoy a good beer now and again, you’re likely to have had a Budweiser or Heineken as your beer in your neighborhood bar. Even those who don’t drink too often are likely to have stumbled upon brands like Modelo and Stella Artois through commercials and other media appearances. Behind all these gold-standard beer brands lays one mega company: Anheuser Busch InBev SA (EBR: ABI).
The company, often called ABI for short, is one of the leading brewing and beverage conglomerates in the world. But owning so many different brands can often spread out a company’s assets too thin, as well as create new problem areas in spots that smaller portfolio companies don’t normally encounter.
Quantitative Analysis: Short Swings for Short Wins
In terms of their market performance, it seems that Anheuser Busch InBev SA has been experiencing decent short run wins, with a 1-month performance of 2.87% gain which brings the price up to EUR 55.52. Even their 6-month performance shows glimmers of success through a 14.35% increase in valuation.
But going over longer terms, long holders might not be having a great time with a 1-year loss in value of 4.87% and an even deeper 46.31% loss in share price in the last 5 years.
Qualitative Analysis: No Bars Make for Tough Time
As with many different markets in the world today, COVID-19 and the accompanying restrictions that followed have severely impacted industries that rely on a constant flow of people. As ABI works by distributing to bars and alcoholic beverage retailers, a large chunk of their sales revenue was essentially cut down as people stayed home and avoided getting sick.
Moreover, further issues in Europe have complicated one of the biggest markets for beer and other alcoholic beverages. With ABI considering pulling out of Russia, many of their brands are expecting to swallow large losses losing such a large market share.
Final Thoughts
Brands like ABI are likely to recover in the long-run given the size and scope of their operations. But as of now, their price valuations remain volatile due to many different factors, some of which include the recent COVID-19 pandemic restriction rules. The company’s PE ratio also remains fairly high at 26.22, indicating that the price may lower over the next few years. Investors ought to review their overall portfolio position before investing in something as tricky as alcoholic beverage manufacturers now.
Note: Please do not invest money or assets in the financial markets that you cannot afford to lose. This article should not be construed to be investment advice and is for information purposes only