The World Cup fever that has gripped fans across the globe is
heating up the stocks of its official sponsor,
Anheuser-Busch InBev SA/NV
) or Budweiser. The shares of the world's largest brewer soared to
a new high of $114.93 yesterday and closed the trading session at
We assume that the shares are surging in anticipation of
blockbuster sales during FIFA World Cup 2014, with Budweiser being
the official partner of this year's greatest soccer event at
Brazil. Per the restrictive official sponsorship agreement between
FIFA and Anheuser-Busch InBev (alias AB InBev), the company's
Budweiser and Brahma are the only beer brands to be sold at the
World Cup stadiums this year.
Moreover, the rising share price depicts acknowledgement for AB
InBev's recent partnership with agricultural chemicals company
) to procure high-quality malting barley, a major raw material for
Per the deal, Syngenta will provide growers with the best quality
seeds of barley and assist them with tailored growing practices to
improve crop production. Syngenta will not only provide training
but also assist with the latest technology and expert advice from
skilled agronomists on agronomy and sustainable farming techniques.
This will enable growers to augment their yields and in turn
increase incomes while delivering the best quality crop to AB InBev
for the production of first-rate beer that caters to exacting
standards. Moreover, it will enable AB InBev to meet the growing
demand for its products.
Optimism also surrounds this Zacks Rank #3 (Hold) company's last
earnings release on Feb 26, wherein it posted fourth-quarter
earnings per share of $1.46 that handily surpassed the Zacks
Consensus Estimate of $1.29 and rose 32.7% year over year. The
strong bottom-line results mainly benefited from solid revenue
growth, lower cost of sales and leveraged operating expenses.
AB InBev reported organic revenue growth of 4.6% and reached
$11,711 million, thereby surpassing the Zacks Consensus Estimate of
$11,528 million. The year-over-year organic growth was mainly
driven by an 8.4% rise in revenues per hectoliter (hl), partially
offset by a 1.7% decline in total volume.
Notably, the stock price of this alcoholic beverage company rose
approximately 21.9% since Feb 5, 2014. The average volume of shares
traded over the last 3 months was approximately 1,091K. Moreover,
the company currently trades at a forward P/E of 22.2x, higher than
the industry average of 21.0x. The premium valuation is justified
based on its long-term estimated earnings per share (EPS) growth
rate of 8.7%.
Apart from AB InBev, its peers
Constellation Brands Inc.
) achieved new 52-week highs of $96.67 and $87.59 respectively, on
Jun 19, 2014.
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