Ambev SA (ABEV) AI Stock Analysis

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Ambev SA

(NYSE:ABEV)

83Outperform

Ambev's strong financial performance and positive earnings call sentiment underpin its robust stock score. The company demonstrates solid profitability, low leverage, and effective capital management. Technical indicators show upward momentum, although caution is advised due to potential overbought conditions. While the valuation is not particularly low, the attractive dividend yield adds appeal. Despite challenges in certain markets, the company's strategic initiatives and digital transformation efforts position it well for continued growth.

Positive Factors

Market Positioning

Higher beer prices could be positive for Ambev as the industry needs to increase prices, providing Ambev with an opportunity to be better positioned in the mainstream category and potentially gain market share.

Stock Valuation

Ambev's stock is seen as trading at an attractive 7% free cash flow yield, suggesting a potentially good investment opportunity.

Negative Factors

Dividend Estimates

Ambev will distribute R$10.5bn, which is below consensus' payout of R$12bn, potentially disappointing investors.

Dividend Expectations

Today's announcement could be disappointing to investors, but an additional payment in the short-term is not ruled out, as the company changes the distribution policy periodicity.

Ambev SA (ABEV) vs. S&P 500 (SPY)

Market Cap

$36.68B

Dividend Yield5.48%

Average Volume (3M)29.86M

Price to Earnings (P/E)14.2

Beta (1Y)0.18

Revenue GrowthN/A

EPS GrowthN/A

CountryUS

Employees43,000

SectorConsumer Defensive

Sector Strength94

IndustryBeverages - Alcoholic

Share Statistics

EPS (TTM)0.17

Shares Outstanding15,761,639,000

10 Day Avg. Volume31,506,246

30 Day Avg. Volume29,862,224

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)2.69

Price to Cash Flow (P/CF)N/A

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$3.12

Price Target Upside30.00% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering5

Ambev SA Business Overview & Revenue Model

Company DescriptionAmbev S.A., through its subsidiaries, produces, distributes, and sells beer, draft beer, carbonated soft drinks, other non-alcoholic beverages, malt, and food products in the Americas. The company operates through four segments: Brazil; Central America and the Caribbean; Latin America South; and Canada. It offers beer primarily under the Skol, Brahma, Antarctica, Brahva, Brahva Gold, Extra, Bud Light, Beck, Leffe and Hoegaarden, Bucanero, Cristal, Mayabe, Cacique, Presidente, Brahma Light, Presidente Light, Presidente Golden Light, Bohemia, The One, Corona, Modelo Especial, Stella Artois, and Budweiser, Quilmes Clásica, Paceña, Taquiña, Huari, Becker, Cusqueña, Michelob Ultra, Busch, Pilsen, Ouro Fino, Banks, Deputy, Patricia, Labatt Blue, Alexander Keith's, and Kokanee brands. The company also provides bottled water, isotonic beverages, energy drinks, coconut water, powdered and natural juices, and ready-to-drink teas under the Guaraná Antarctica, Gatorade, H2OH!, Lipton Iced Tea, Fusion, Do Bem, Pepsi, Canada Dry, Squirt, Red Rock, Pepsi-Cola, Seven Up, Nutrl, Bud Light Seltzer, Palm Bay, and Mike's brands. It offers its products through a network of third-party distributors and a direct distribution system. The company was founded in 1885 and is headquartered in São Paulo, Brazil. Ambev S.A. is a subsidiary of Interbrew International B.V.

How the Company Makes MoneyAmbev SA generates revenue through the sale of its diverse beverage portfolio across multiple markets in the Americas. The company's primary revenue stream is the production and distribution of beer, which includes both its own brands and international labels under licensing agreements. Non-alcoholic beverages such as soft drinks and energy drinks also contribute to its earnings. Ambev benefits from its extensive distribution network and economies of scale, allowing it to maintain competitive pricing and strong market presence. Additionally, strategic partnerships, such as those with PepsiCo, enhance its product offerings and market reach, further driving revenue growth.

Ambev SA Financial Statement Overview

Summary

Ambev SA exhibits strong financial health across all key areas. The income statement reflects solid profitability and growth, while the balance sheet highlights low leverage and effective capital management. The cash flow statement indicates excellent liquidity and cash generation, positioning the company well for future opportunities. While performance is commendable, slight income fluctuations suggest vigilance is necessary to maintain stability.

Income Statement

Very Positive

Ambev SA has shown robust performance with a strong gross profit margin of 51.2% and a consistent net profit margin of 16.1% in 2024. The company experienced a healthy revenue growth rate of 12.2% from 2023 to 2024. Both EBIT and EBITDA margins are solid at 24.4% and 29.9%, respectively, indicating efficient operational management. Despite these strengths, slight fluctuations in net income across years suggest potential volatility.

Balance Sheet

Very Positive

The balance sheet is strong with a low debt-to-equity ratio of 0.035, highlighting limited leverage risk. Ambev's return on equity is impressive at 14.6%, reflecting effective use of equity to generate profits. Additionally, the equity ratio stands at 60.7%, suggesting a stable capital structure dominated by equity. Minimal debt and substantial cash reserves contribute to the company's solid financial footing.

Cash Flow

Very Positive

Ambev's cash flow statements reveal a robust free cash flow growth rate of 14.1% from 2023 to 2024, indicating strong cash generation capabilities. The operating cash flow to net income ratio remains robust at 1.81, and the free cash flow to net income ratio is 1.48, demonstrating efficient cash flow management and excellent liquidity. These metrics underscore Ambev's ability to fund operations and growth without relying heavily on external financing.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
89.45B	79.74B	79.71B	72.85B	58.38B
	Gross Profit
45.84B	40.45B	39.29B	37.19B	31.31B
	EBIT
21.80B	18.83B	17.69B	17.08B	15.97B
	EBITDA
26.72B	23.46B	23.08B	22.87B	20.77B
	Net Income Common Stockholders
14.44B	14.50B	14.46B	12.67B	11.38B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
29.84B	16.34B	15.38B	18.54B	18.79B
	Total Assets
162.51B	132.64B	137.96B	138.60B	125.20B
	Total Debt
3.45B	3.50B	3.85B	3.10B	4.79B
	Net Debt
-25.14B	-12.56B	-11.08B	-13.53B	-12.30B
	Total Liabilities
62.93B	52.50B	54.63B	54.58B	50.05B
	Stockholders Equity
98.64B	78.97B	81.96B	82.64B	73.82B
Cash Flow		Free Cash Flow
21.35B	18.71B	14.11B	15.22B	14.16B
	Operating Cash Flow
26.10B	24.71B	20.64B	22.90B	18.86B
	Investing Cash Flow
-5.46B	-5.77B	-5.00B	-7.73B	-6.80B
	Financing Cash Flow
-10.35B	-16.12B	-16.34B	-16.04B	-8.60B

Ambev SA Technical Analysis

Technical Analysis Sentiment

Positive

Last Price2.40

Price Trends

50DMA

2.15

Positive

100DMA

2.03

Positive

200DMA

2.08

Positive

Market Momentum

MACD

0.04

Positive

RSI

61.55

Neutral

STOCH

75.03

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ABEV, the sentiment is Positive. The current price of 2.4 is above the 20-day moving average (MA) of 2.31, above the 50-day MA of 2.15, and above the 200-day MA of 2.08, indicating a bullish trend. The MACD of 0.04 indicates Positive momentum. The RSI at 61.55 is Neutral, neither overbought nor oversold. The STOCH value of 75.03 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ABEV.

Ambev SA Risk Analysis

Ambev SA disclosed 49 risk factors in its most recent earnings report. Ambev SA reported the most risks in the “Legal & Regulatory” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Ambev SA Peers Comparison

Overall Rating

UnderperformOutperform

Sector (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ABEV	83 Outperform	$36.68B	14.22	16.55%	5.48%	―	―
CCU	79 Outperform	$2.77B	16.31	11.55%	1.69%	0.15%	35.56%
BUD	74 Outperform	$126.40B	21.65	7.31%	1.00%	0.64%	10.02%
FMX	74 Outperform	$21.67B	13.90	9.61%	1.60%	3.83%	-49.90%
TAP	74 Outperform	$11.90B	10.98	8.54%	3.05%	-0.64%	22.45%
STZ	68 Neutral	$33.55B	49.10	-0.98%	2.21%	3.69%	-55.78%
Sector *	63 Neutral	$9.90B	14.43	3.80%	201.21%	4.14%	9.08%

* Consumer Defensive Sector Average

Performance Comparison

ABEV

Ambev SA

2.40

0.25

11.63%

BUD

Anheuser-Busch Inbev Sa

65.63

8.35

14.58%

CCU

Compania Cervecerias Unidas SA

15.31

3.69

31.76%

STZ

Constellation Brands

186.63

-67.35

-26.52%

FMX

Fomento Economico Mexicano

105.82

-10.12

-8.73%

TAP

Molson Coors

58.75

-3.16

-5.10%

Ambev SA Earnings Call Summary

Earnings Call Date: Feb 26, 2025 | % Change Since: 28.34% | Next Earnings Date: May 8, 2025

Earnings Call Sentiment Neutral

Ambev demonstrated strong digital transformation and EBITDA growth, with significant free cash flow and strategic shareholder returns. However, challenges remain in Argentina and due to tax headwinds in Brazil, alongside pressures from brand underperformance and cost increases.

Highlights

Digital Transformation Success

Over 88% of gross revenues transacted through BEES, Ambev's B2B platform, with 1.3 million monthly active buyers, marking a 14% increase from the previous year.

EBITDA Growth and Margin Expansion

Consolidated EBITDA grew by 11.4% organically, with margin expansion in all business units, delivering double-digit growth and gross and EBITDA margin expansion for the second consecutive year.

Free Cash Flow and Shareholder Returns

Free cash flow to equity increased by 37%, with nearly R$18 billion generated. The company also executed approximately 45% of its share buyback program and approved intermediary dividends of around R$2 billion.

Brazil Market Performance

Beer volumes in Brazil increased by 0.6% driven by market share gains. Non-alcoholic beer volumes rose by 4.1%, and NAB volumes grew by 4.1% led by Guarana Antarctica.

Strong Performance in Dominican Republic and Canada

Dominican Republic volumes grew by mid-single digits, achieving all-time high volumes for the Presidente family. In Canada, mega brands grew volumes by low-single digits.

Lowlights

Argentina's Challenging Environment

The beer industry in Argentina declined by low 20s due to a challenging consumer environment, although market share remained stable.

Impact of Tax Headwinds in Brazil

Significant tax headwinds in Brazil resulted in a nearly R$3.5 billion negative impact due to less tax deductibility, contributing to a 2.3% decline in normalized profit.

Skol Brand Underperformance

Skol volumes declined, posing a priority for improvement in 2025, impacting the overall portfolio despite being one of the core brands.

Cost Pressures and FX Challenges

Expectations of cash COGS per hectoliter in Brazil beer to grow between 5.5% and 8.5% in 2025 due to depreciation of the Brazilian real and increased aluminum prices.

Company Guidance

During Ambev's 2024 Fourth Quarter Results Conference Call, CEO Carlos Lisboa highlighted several key metrics showcasing the company's performance and future guidance. Over the past five years, Ambev reported a 37% growth in consolidated EBITDA and generated nearly R$65 billion in free cash flow to equity, with significant investments amounting to approximately R$30 billion in CapEx and R$33 billion in sales and marketing. For the year 2024, volumes excluding Argentina increased by 1.4%, with mega brands experiencing a 7.6% growth. Digital initiatives also saw progress, with BEES achieving 1.3 million monthly active buyers, a 14% increase from the previous year. Zé Delivery in Brazil fulfilled over 66 million orders, marking a 10% growth compared to 2023. The company also announced a capital allocation strategy, executing approximately 45% of its current share buyback program and distributing intermediary dividends of around R$2 billion, with a focus on continuing margin expansion despite expected cost headwinds in 2025.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.