Factors Likely to Influence AB InBev's (BUD) Earnings in Q1

Anheuser-Busch InBev SA/NV BUD, also known as AB InBev, is slated to release first-quarter 2021 results on May 6. The leading alcohol beverage company is likely to register year-over-year top and bottom-line growth when it reports first-quarter 2021 results. The Zacks Consensus Estimate for AB InBev’s first-quarter bottom line is pegged at earnings of 48 cents per share, suggesting significant growth from a loss of 42 cents reported in the year-ago quarter. The consensus estimate has been unchanged in the past seven days.

For first-quarter revenues, the consensus mark is pegged at $11.49 billion, suggesting 4.5% growth from the prior-year reported figure.

In the last reported quarter, the company delivered a negative earnings surprise of 14.3%. Moreover, its earnings missed the Zacks Consensus Estimate by 22.8%, on average, in the trailing four quarters.

Key Factors to Note

AB InBev’s top line has been witnessing momentum, driven by a marked recovery in volume and revenue per hectoliter (hl). Despite the pandemic-led challenges, it reported better-than-expected revenue results as well as organic revenue growth in fourth-quarter 2020. Strength in the off-premise channel and premium brands as well as investment in B2B platforms, e-commerce channels and digital marketing in the past few months have been key growth drivers. Moreover, the company has been witnessing an improving volume trend, which has been aiding organic top-line performance. The persistence of the factors is likely to have aided the first-quarter performance.

Moreover, the company’s fundamental strength as well as continued resilience in the global beer category is expected to have aided sales performance in the to-be-reported quarter.

AnheuserBusch InBev SANV Price and EPS Surprise

AnheuserBusch InBev SANV Price and EPS Surprise

AnheuserBusch InBev SANV price-eps-surprise | AnheuserBusch InBev SANV Quote

Additionally, AB InBev’s commercial strategy has been driving strong revenue performance in North America, including gains in the United States and Canada, even though the effects of the second wave of the COVID-19 outbreak have resulted in renewed restriction. In the fourth quarter of 2020, the continued execution of the commercial strategy resulted in market share gains of 40 basis points (bps) in the United States, which is expected to have continued in the first quarter. Further, the strong performance of its above core brands, including Michelob ULTRA, Bud Light Seltzer and Corona, is expected to have been key drivers in the quarter under review.

Also, the company’s investment in B2B platforms, e-commerce channels and digital marketing has accelerated in the past few months, which is expected to have boosted top and bottom-line growth in the to-be-reported quarter. The company’s first-quarter performance is expected to have gained from the continued investments in its portfolio as well as rapidly growing its digital platform, including BEES and Ze Delivery.

However, the company has been witnessing cost headwinds, driven by higher cost of sales, SG&A expenses and other costs, which is likely to have impacted margins in the first quarter. Supply-chain adjustments to meet the evolving demand and operational deleveraging resulting from the impacts of COVID-19 on volumes have been hurting cost of sales. This is expected to have weighed on gross margin performance in the quarter under review.

Moreover, EBITDA margin is expected to have been under pressure due to the adverse channel and packaging mix along with currency and commodity headwinds.

Zacks Model

Our proven model doesn’t conclusively predict earnings beat for AB InBev this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

AB InBev has a Zacks Rank #3 and Earnings ESP of 0.00%.

Stocks Poised to Beat Earnings Estimates

Here are some companies that you may want to consider as our model shows that these have the right combination of elements to deliver an earnings beat.

Monster Beverage Corporation MNST presently has an Earnings ESP of +0.41% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Nomad Foods Limited NOMD currently has an Earnings ESP of +0.73% and a Zacks Rank #3.

Tyson Foods, Inc. TSN has an Earnings ESP of +16.03% and a Zacks Rank #3 at present.

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