Market Inference Overview -- ABEV Stock

Ambev logged a 1.54% change Friday, and is now trading at a price of $2.63 per share.

Ambev shares moved -14.05% over the last 52 weeks, with a high of $3.15 and a low of $2.3. During this time, the stock basically tracked the performance of the S&P 500. As of January 2022, the company's 50-day average price is $3.0.

Ambev SA produces, distributes and sells beer, draft beer, carbonated soft drinks (CSD), other non-alcoholic beverages, malt and food products in the Americas. The company is headquartered in So Paulo, Brazil.. The large-cap Consumer Staples company is based in São Paulo, SP. Ambev has returned a 5.38% dividend yield over the last 12 months.

Low Leverage Levels But Stagnant EPS Growth:

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $52,600 $58,379 $72,854 $79,709
Revenue Growth n/a 10.99% 24.8% 9.41%
Gross Margins 58.79% 53.64% 51.05% 49.29%
Gross Margins Growth n/a -8.76% -4.83% -3.45%
Operating Margins 30.56% 27.36% 23.44% 22.19%
Operating Margins Growth n/a -10.47% -14.33% -5.33%
Net Margins 22.4% 19.49% 17.39% 18.14%
Net Margins Growth n/a -12.99% -10.77% 4.31%
Earnings Per Share $0.74 $0.72 $0.8 $0.91
EPS Growth n/a -2.7% 11.11% 13.75%
Diluted Shares (MM) 15,869 15,868 15,858 15,858
Free Cash Flow (MM) $13,312 $14,163 $15,224 $14,109
FCF Growth n/a 6.39% 7.49% -7.32%
Capital Expenditures (MM) $5,069 $4,693 $7,677 $6,533
Net Debt / EBITDA -0.55 -0.6 -0.69 -0.5

Ambev Is Currently Undervalued:

Compared to the Consumer Staples sector's average of 24.36, Ambev has a trailing twelve month P/E ratio of 15.47 and, according to its EPS guidance of 0.15, an expected P/E ratio of 17.53. Ambev's PEG ratio is -1.38 based on its -11.2% annual average growth rate of historical and projected earnings per share. This indicates that the company's shares are overvalued.

However, Ambev is likely undervalued in terms of its equity because its P/B ratio is 2.649 compared to its sector average of 4.29. The company's shares are currently trading -72.32% below their Graham number, implying there is a margin of safety for the stock. The Graham number is calculated according to the formula:

√(22.5 * 5-year average EPS * book value per share) = √(22.5 * 0.77 * 5.21) = $9.5

Ambev Is the Subject of Mixed Market Indicators:

7 analysts are following Ambev and have set target prices ranging from $2.5 to $5.0 per share. On average, they have given the company a rating of buy. At the current price of $2.63, ABEV is trading -24.86% away from its average analyst target price of $3.5 per share, implying an analyst consensus of strong upside potential for the stock.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.