Ambev SA (ABEV) AI Stock Analysis

• Market Cap: $35.13B
• Dividend Yield: 2.07%
• Average Volume (3M): 29.88M
• Price to Earnings (P/E): 13.4
• Beta (1Y): 0.23
• Revenue Growth: -0.79%
• EPS Growth: -10.83%
• Country: US
• Employees: 43,000
• Sector: Consumer Defensive
• Sector Strength: 60
• Industry: Beverages - Alcoholic
• EPS (TTM): 0.03
• Shares Outstanding: 15,761,639,000
• 10 Day Avg. Volume: 23,493,984
• 30 Day Avg. Volume: 29,881,987
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.01
• Enterprise Value/Revenue: 0.38
• Enterprise Value/Gross Profit: 0.75
• Enterprise Value/Ebitda: 1.31
• 1Y Price Target: $2.88
• Price Target Upside: 31.51% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6

• Rating: 71 Outperform
• Price Target: $2.50 ▲(14.16% Upside)

Ambev SA's overall stock score is driven by strong financial performance and a positive earnings call, highlighting robust revenue growth and strategic initiatives. However, technical indicators suggest bearish momentum, and the decline in free cash flow growth is a concern. The stock's valuation is reasonable, with a fair P/E ratio and a decent dividend yield.

Positive Factors

Capital Allocation

The shift to more frequent cash returns by Ambev could enhance visibility on capital allocation and potentially support the shares.

Market Positioning

Higher beer prices present an opportunity for Ambev to strengthen its position in the mainstream category and potentially gain market share.

Valuation

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

Negative Factors

Cost Pressures

Potential increases in costs due to higher aluminum prices and currency depreciation pose a risk to Ambev.

Dividend Expectations

The announced dividends and interest-on-capital payments were below estimates and consensus, which could disappoint investors.

Ambev SA Business Overview & Revenue Model

Company Description

Ambev 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 Money

Ambev generates revenue primarily through the sale of its beverage products, which include beer, soft drinks, and other non-alcoholic beverages. The company operates on a revenue model that includes both direct sales to retailers and partnerships with distributors. Key revenue streams come from the sale of its flagship beer brands, which account for a significant portion of its sales, as well as a diverse range of soft drinks. Ambev also benefits from economies of scale due to its large production capacity and extensive distribution network. Strategic partnerships with local and international retailers enhance its market reach, while the company's focus on innovation and new product development helps to capture emerging consumer trends. Additionally, the company engages in promotional activities and marketing campaigns to drive brand loyalty and increase market share.

Ambev SA Financial Statement Overview

Summary

Ambev SA exhibits strong financial performance with robust revenue growth and profitability margins. The balance sheet is solid with low leverage, but the decline in free cash flow growth is a concern. Overall, the company is financially stable with effective cost management, though it should focus on improving cash flow generation.

Income Statement

Ambev SA has demonstrated strong revenue growth with a 5% increase in TTM, following a 12.18% growth in the previous year. The company maintains a healthy gross profit margin of 51.5% and a net profit margin of 16.08% in TTM, indicating efficient cost management and profitability. EBIT and EBITDA margins are robust at 24.03% and 31.87% respectively, showcasing operational efficiency. However, the slight decline in net profit margin from the previous year suggests a need to monitor cost controls.

Balance Sheet

The balance sheet reflects a strong equity position with a low debt-to-equity ratio of 0.034, indicating low leverage and financial stability. The return on equity (ROE) is solid at 15.38%, suggesting effective use of equity to generate profits. The equity ratio stands at 65.03%, highlighting a strong capital structure. However, the slight decrease in stockholders' equity over the TTM period warrants attention.

Cash Flow

Ambev's cash flow statement shows a decline in free cash flow growth by -167.2% in TTM, which is a concern. The operating cash flow to net income ratio is 0.71, indicating adequate cash generation relative to net income. The free cash flow to net income ratio is healthy at 0.82, but the negative growth in free cash flow suggests potential cash management issues that need addressing.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	91.72B	89.45B	79.74B	79.71B	72.85B	58.38B
Gross Profit	47.23B	45.84B	40.45B	39.29B	37.19B	31.31B
EBITDA	27.03B	26.72B	23.46B	23.08B	22.87B	20.77B
Net Income	14.75B	14.44B	14.50B	14.46B	12.67B	11.38B
Balance Sheet
Total Assets	142.16B	162.51B	132.64B	137.96B	138.60B	125.20B
Cash, Cash Equivalents and Short-Term Investments	17.52B	29.84B	16.34B	15.38B	18.54B	18.79B
Total Debt	3.16B	3.45B	3.50B	3.85B	3.10B	4.79B
Total Liabilities	48.95B	62.93B	52.50B	54.63B	54.58B	50.05B
Stockholders Equity	92.47B	98.64B	78.97B	81.96B	82.64B	73.82B
Cash Flow
Free Cash Flow	21.66B	21.35B	18.71B	14.11B	15.22B	14.16B
Operating Cash Flow	26.28B	26.10B	24.71B	20.64B	22.90B	18.86B
Investing Cash Flow	-4.35B	-5.46B	-5.77B	-5.00B	-7.73B	-6.80B
Financing Cash Flow	-19.14B	-10.35B	-16.12B	-16.34B	-16.04B	-8.60B

Ambev SA Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 2.19
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ABEV, the sentiment is Negative. The current price of 2.19 is below the 20-day moving average (MA) of 2.25, below the 50-day MA of 2.33, and above the 200-day MA of 2.16, indicating a neutral trend. The MACD of -0.04 indicates Positive momentum. The RSI at 38.32 is Neutral, neither overbought nor oversold. The STOCH value of 12.82 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ABEV.

Ambev SA Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CCU	77 Outperform	$2.31B	14.89	10.15%	3.60%	13.92%	32.69%
BUD	72 Outperform	$121.95B	17.05	8.97%	1.70%	-2.06%	21.03%
ABEV	71 Outperform	$35.13B	13.36	15.08%	2.07%	-0.79%	-10.83%
FMX	67 Neutral	$17.54B	31.28	6.88%	5.29%	-2.73%	-37.93%
TAP	67 Neutral	$10.18B	10.13	7.79%	3.56%	-5.48%	-6.99%
Sector *	66 Neutral	£7.72B	8.36	7.55%	3.50%	2.08%	24.83%
STZ	60 Neutral	$29.66B	49.10	-5.05%	2.44%	-0.47%	-117.62%