🍺 BUD: The Biggest in Brew Town?

Cathie Wood's latest stock picks and Streaming Games.

Hey Global Investor, here’s what you need to know before the US markets open.

Market Snapshot 📈

S&P 500 (Friday’s Close) 3,811.15 −18.19 (0.48%)

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🍺 AB InBev: Bottoms Up?

Anheuser-Busch InBev (BUD) hints at a strong return in 2021 with its recent earnings report for Q4 2020, despite a lackluster 2020. (Tweet This)

Background: Anheuser-Busch InBev, or AB InBev, is the world’s largest beer brewer by volume and revenue, founded and headquartered in Belgium. The company boasts a 600-year history (yup!), although the most significant event was InBev’s acquisition of Anheuser-Busch in 2008. Over the years, AB InBev has acquired competitors large and small, the biggest being SABMiller, for $107B.

AB InBev manufactures and distributes almost 630 beverage brands across 150 countries, including Budweiser, Corona, & Bud Light, to name a few. AB InBev also partners with PepsiCo (PEP) in distributing and bottling brands like Pepsi, 7UP, and Gatorade. The company’s Asia business raised $5B through IPO in 2019, the second-biggest IPO that year.

The global pandemic and the concomitant lockdown across continents significantly impacted the company’s business in the first half of 2020. Still, as the world opens up, things are looking up slowly but surely for AB InBev.

What Happened?: In the latter half of the year, sales volumes returned as countries eased restrictions. Not surprisingly, consumption shifted to at-home vs. at outside venues. The company ended the year reporting a core profit in Q4.

Key numbers:

  • Revenue: $12.7B (drop of 4.2% YoY)
  • EBITDA: $5.07B (down 2.4% Y-o-Y)
  • EPS: $0.81

At-home consumption requires single-use cans, which cost the company more than reusable keg and returnable glass bottles in bars and restaurants. Other costs weighing on the company were dollar-denominated commodities such as barley and aluminium, which were bought in depreciating local currency such as the Brazilian Real. These costs have direct implications on margins.

The company is also investing $1B over the next two years to upgrade its facilities to produce more hard seltzer. Seltzer sales have been growing in double-digits the past few years, and AB InBev is positioning itself to attend to consumer demand.

The company is also replacing current CEO Carlos Brito, in whose tenure growth was primarily through acquisitions. With the Covid-19 crisis potentially abating, the focus needs to shift more to internal growth. Anheuser-Busch’s CEO, Michel Doukeris, is the favorite to take over from Brito as the consensus internal candidate.

Market Reaction: BUD ended the day at $57.73 (down 3.96%). The shares are up 1.84% in pre-market trading.

Company Snapshot 📈

BUD $57.73 -2.38 (-3.96%)

Analyst Ratings 32 Analysts BUY 50%  HOLD 44%  SELL 6%

Newsworthy 📰

Thumbs up: J&J’s COVID-19 shot gets CDC panel backing; vaccine near shipping (JNJ -2.64%)

Investing: Cathie Wood’s Ark Invest Added Shares Of Palantir, Twitter, And Sold Apple, Facebook On Friday (PLTR +1.45%, TWTR +3.31%, AAPL +0.22%, FB +1.15%)

Gaming: Microsoft Working on New Xbox App That Will Allow New Xbox Consoles to Stream Games on Windows (MSFT +1.48%)

Later Today 🕒

  • Before Market Open: Workhorse Group Inc Inc Earnings (WKHS)
  • After Market Close: Zoom Video Communications Inc Earnings (ZM)
  • 8:30 PM IST: ISM manufacturing index

Fun Fact of The Day 🌞

McDonald’s once made bubblegum-flavored broccoli

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