Back when a gaggle of Brazilian investment bankers were stalking Anheuser-Busch InBev, we observed that they might be good in seizing control of companies, but their marketing chops left something to be desired. Nothing since they deposed the Busch family from controlling the leading U.S. brewer has changed our opinion.
Slowly, Wall Street is coming to that conclusion, too, using the metrics that especially appeal to investment bankers. They latest is Simply Wall St, a Australian-based website with 4 million users worldwide that covers 100,000 stocks in 95 countries. It took a look at ABI’s returns and finds them, well, disappointing.
“Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount of capital employed. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine,” Simply Wall St explains.
And how does ABI stack up? “We aren’t jumping out of our chairs at how returns are trending,” it says.
ABI’s return on capital employed is 7.4%, below the 9.1% figure generated by the beverage industry. “The returns on capital haven’t changed much for Anheuser-Busch InBev in recent years. The company has consistently earned 7.4% for the last five years, and the capital employed within the business has risen 20% in that time. Given the company has increased the amount of capital employed, it appears the investments that have been made simply don’t provide a high return on capital,” it says.