Anheuser-Busch InBev is in the same league as Coca-Cola and Diageo in terms of return on capital, dominant market positioning and steady value accumulation, but its stock price stinks says Vladimir Dimitrov, a financial analyst, on Seeking Alpha. What’s up?
In a word, he writes, the answer is “capital allocation mistakes made years ago.’ And, he warns, “the problems are far from over.
“Even though the total amount of net debt has declined in recent years, the share price is now even more sensitive to changes in certain exchange rates. At the same time, stiff competition in key Emerging Markets and rising raw material costs will require even higher reinvestment in the business, which does not bode well with the debt related risks. Consequently, AB InBev’s low valuation multiples do not yet mean that the company’s share price is going to outperform its peers and consumer staples as a whole.