One of the standouts of today's morning trading session has been Anheuser-Busch InBev, which logged a -1.5% drop and underperformed the S&P 500 by -2.0%. The Beverages stock is now trading at $56.19 per share and is -21.72% below its average target price of $71.78. Analysts have set target prices ranging from $65.0 to 80.0 dollars per share, and have given the stock an average rating of buy.
The market seems to share this optimistic view, since Anheuser-Busch InBev has a short interest of only 0.3% (this is the percentage of the share float that is being shorted). Each short position represents an investor's expectation that the price of the stock will decrease in the future.
When a stock is sold short, it means an investor has borrowed shares of the stock from their broker, and then sold them at the going market price. The investor hopes for the price to decline, so that they might buy those shares back at a lower price in the future. Once they do, they can return the borrowed shares to their broker, and keep the profit they made on the transaction.
One measure of the market sentiment regarding a stock is its rate of institutional ownership, which in the case of Anheuser-Busch InBev stands at 5.9%. This indicates a lower than average rate of institutional ownership -- but what does that have to do with sentiment regarding the stock?
The reason we look at institutional ownership is that institutions such as hedge funds, pension funds, and mutual funds have vast research capabilities. They are often close to management, speaking to them one-on-one and gaining an understanding of the opportunities and challenges they face. Thus, if an institution is willing to place their capital in a company, it's likely that their due diligence has shown it is a safe bet.
Overall, there is mixed market sentiment towards Anheuser-Busch InBev because of an analyst consensus of strong upside potential, a buy rating, a very low short interest, and a very small number of institutional investors. Investors should not base their decisions on market sentiment only, they should also be aware of a stock's fundamentals before committing.
At a glance, here are some essential statistics you may want to know about BUD:
-
It has trailing 12 month earnings per share (EPS) of $3.2 per share
-
Anheuser-Busch InBev has a trailing 12 month Price to Earnings (P/E) ratio of 17.6 while the S&P 500 average is 29.3
-
The company has a Price to Book (P/B) ratio of 1.41 in contrast to the S&P 500's average ratio of 4.74
-
Anheuser-Busch InBev is a Consumer Staples company, and the sector average P/E and P/B ratios are 23.09 and 3.3 respectively
