Ambev (NYSE:ABEV) Q3 2025 Earnings Call October 30, 2025 11:30 AM ET Speaker0Good afternoon, and thank you for waiting. We would like to welcome everyone to Ambev's twenty twenty five Third Quarter Results Conference Call. Today with us, we have Mr. Carlos Lisboa, Ambev's CEO and Mr. Guillermo Fleury, CFO and Investor Relations Officer.As a reminder, this conference presentation is available for download on our website, ir.mbev.com.br as well as through the webcast link. We would like to inform that this ev ...

Financial Performance - Normalized net income increased by 7% in 3Q25[83] - Normalized EBITDA reached BRL 384 billion in 3Q25[83] - A share buyback program of R$25 billion was approved[18,92] - R$ 6 billion in dividends announced year-to-date[92] Business Unit Performance - Brazil Beer volume declined by 77% while NR/hl increased by 57%[57] - Brazil NAB volume decreased by 86% but NR/hl grew by 100%[59] - LAS (Latin America South) experienced a volume decrease of 08% with NR/hl increasing by 100%[62] - CAC (Central America and the Caribbean) saw a volume increase of 13% and NR/hl growth of 14%[67] - Canada's volume decreased by 20% while NR/hl increased by 20%[70] Strategic Initiatives - Zé Delivery's GMV (Gross Merchandise Value) reached BRL 80 billion annualized with a 9% increase in AOV (Average Order Value)[31] - Premium & Super Premium volumes up more than 9%[26] - The company is focused on maximizing return on investments and disciplined cost management[81]

Core Insights - Ambev (ABEV) is currently more attractive to value investors compared to Diageo (DEO) based on Zacks Rank and valuation metrics [1][2] Valuation Metrics - ABEV has a Zacks Rank of 2 (Buy), while DEO has a Zacks Rank of 4 (Sell), indicating a stronger earnings outlook for ABEV [2] - ABEV's forward P/E ratio is 12.51, compared to DEO's forward P/E of 14.44, suggesting ABEV is undervalued relative to DEO [4] - ABEV has a PEG ratio of 2.20, while DEO's PEG ratio is significantly higher at 4.26, indicating ABEV's expected earnings growth is more favorable [4] - ABEV's P/B ratio is 2.1, whereas DEO's P/B ratio is 4.06, further supporting ABEV's valuation advantage [5] - ABEV's overall Value grade is A, while DEO's Value grade is C, highlighting ABEV's superior valuation metrics [5]

Core Insights - The stock market is experiencing a bullish trend in Q4 2025, with several investment opportunities under $10 that may offer attractive entry points based on valuation [1] - Companies highlighted include Ambev S.A. and Snap, both of which have solid fundamentals despite their low share prices [2][6] Ambev S.A. (NYSE: ABEV) - Ambev is trading around $2 per share and is considered a defensive favorite in a volatile economy, supported by steady profit margins and a low debt balance sheet [2][3] - The company reported a 7.5% increase in quarterly profit, although overall volumes declined due to currency challenges and cost pressures [3] - Analysts estimate ABEV is trading 25% to 30% below its fair value, with profit margins and cash flow metrics outperforming many global beverage peers [3] - ABEV's stock was up 0.90% at $2.25, marking a year-to-date gain of 21% [4] Snap (NYSE: SNAP) - Snap is currently trading just under $10 and has faced challenges since its post-pandemic highs, but management's focus on monetization and AI-driven ad tools is yielding positive results [6][7] - The company reported $1.3 billion in revenue for the most recent quarter, a 16% year-over-year increase, while also narrowing its losses through cost-cutting measures [7] - Snap's Monthly Active Users reached 932 million, which could support revenue growth, especially with increased advertising spending during the holiday season [8] - Despite a nearly 30% decline year-to-date, trading at $7.65, improving fundamentals may present a turnaround opportunity for investors [8]

Group 1 - Ambev S.A. is considered one of the best penny stocks to buy according to hedge funds, despite Goldman Sachs reducing its price target to R$10.10 from R$10.20 while maintaining a Sell rating [1] - The latest industrial product data from IBGE indicates a 12% decrease in alcoholic beverage production in Brazil for August, averaging a 13% year-over-year contraction quarter-to-date and a 4% drop over the past 12 months [2] - Ambev S.A. operates in three geographical segments: Brazil, Central America and the Caribbean (CAC), and Canada [3] Group 2 - The company produces, distributes, and sells a variety of beverages, including carbonated soft drinks, beer, and other non-alcoholic and non-carbonated products [2] - There is a belief that certain AI stocks may offer greater upside potential and carry less downside risk compared to Ambev S.A. [3]

Core Viewpoint - Ambev (ABEV) is currently viewed as a better value opportunity compared to Diageo (DEO) based on various financial metrics and Zacks Rank analysis [1][7] Valuation Metrics - ABEV has a forward P/E ratio of 12.29, while DEO has a forward P/E of 14.02, indicating ABEV is more attractively priced [5] - ABEV's PEG ratio is 2.16, compared to DEO's PEG ratio of 3.42, suggesting ABEV offers better value when considering expected earnings growth [5] - ABEV's P/B ratio stands at 2.06, significantly lower than DEO's P/B ratio of 4.03, further supporting ABEV's valuation advantage [6] Earnings Outlook - ABEV is currently exhibiting an improving earnings outlook, which is a positive indicator in the Zacks Rank model [3][7] - The Zacks Rank for ABEV is 2 (Buy), while DEO holds a Zacks Rank of 4 (Sell), reflecting a more favorable investment sentiment towards ABEV [3]

Group 1 - The article highlights a cautious outlook on many brewery stocks due to unfavorable market trends, but notes that a relatively smaller stock has shown resilience and potential for growth [1] - The author has extensive experience in the logistics sector and stock investing, focusing on ASEAN and NYSE/NASDAQ stocks, particularly in banks, telecommunications, logistics, and hotels [1] - The investment strategy has evolved from initially focusing on blue-chip companies to diversifying across various industries and market cap sizes, including holdings for retirement and trading profits [1] Group 2 - The author entered the US market in 2020, gaining insights through a trading account managed for a relative, which led to the decision to open a personal account [1] - The analysis conducted by the author compares US market trends with those in the Philippine market, indicating a comprehensive approach to investment research [1]

Group 1: Lockheed Martin - Lockheed Martin derives approximately 75% of its $71 billion sales from contracts with the U.S. Department of Defense, making it a key player in the defense contracting industry [2][3] - The F-35 contract is the largest defense procurement program ever awarded and is expected to provide stable revenue through the 2060s, benefiting long-term investors [3] - Lockheed Martin recently introduced Vectis, a new drone designed for collaboration with fighter jets, indicating the company's adaptability and continued growth potential in the defense sector [5][6] - The company has a price-to-earnings ratio of 27 and offers a dividend yield of 2.7%, providing investors with both income and stability [6] Group 2: Ambev - Ambev is the largest brewer in Latin America and the Caribbean, holding monopolistic positions with approximately 60% beer market share in Brazil and over 70% in Bolivia [8][9] - The company has significant growth potential as per capita beer consumption in Latin America is lower than in developed countries, presenting opportunities for volume growth [10] - Ambev benefits from a trend of consumers preferring foreign beers, allowing it to leverage Anheuser-Busch InBev's premium portfolio [10] - The company maintains a high-yield dividend of 7.6% and is well-positioned to sustain its market share through economic cycles [11] Group 3: Investment Outlook - Both Lockheed Martin and Ambev offer healthy dividends, long-term growth potential, and competitive advantages, making them suitable for dividend-focused portfolios [12]

Company Overview - Ambev S.A. is a leading Brazilian beverage company that produces and distributes beer, soft drinks, and ready-to-drink beverages across various regions including Brazil, Central America, the Caribbean, Latin America South, and Canada, with major brands like Skol, Brahma, Antarctica, Budweiser, and Stella Artois [2] Financial Performance - For Q2 2025, Ambev reported revenue of $3.59 billion, reflecting a 2.65% year-over-year increase, although it was approximately $251 million below analyst expectations [3][5] - Net income increased by 15%, and EBITDA experienced high single-digit growth, with margins improving by 110 basis points [3] - Organic volumes fell by 4.5% due to cooler weather affecting consumption in key regions [3] Leadership Changes - On September 1, 2025, Ambev appointed a new Board of Executive Officers, with Carlos Eduardo Klutzenschell Lisboa as CEO and Guilherme Fleury de Figueiredo Ferraz Parolari as CFO, aiming to strengthen strategic execution amid sector challenges [4] Shareholder Returns - The company raised its dividend to $0.023 per share, up from $0.02, offering a high yield of 6.6%, demonstrating a commitment to shareholder returns despite market headwinds [5]

Core Viewpoint - Ambev S.A. is recognized as one of the most profitable penny stocks to consider, with upcoming earnings expectations indicating potential growth despite recent challenges in revenue and volume [1]. Financial Performance - In Q2 FY2025, Ambev reported revenue of $3.59 billion, which was $250.95 million below consensus estimates, but represented a year-over-year increase of 2.65% [2]. - The adjusted earnings per share for Q2 FY2025 were $0.03, aligning with market expectations [2]. - The company experienced a 4.5% decline in total organic volumes compared to the previous year, attributed to industry softness [2]. - Despite the volume decline, Ambev achieved a 15% increase in net income, and EBITDA grew by high single digits, with a margin expansion of 110 basis points [2]. Market Expectations - Ambev is set to report its Q3 2025 earnings on October 30, 2025, with Wall Street anticipating adjusted earnings per share of $0.04 and revenue around $4.24 billion [1]. - Following the Q2 results, UBS maintained a Hold rating on Ambev, lowering the price target from $2.5 to $2.2, while Evercore ISI assigned a Buy rating with a price target of $4 [3]. - As of September 16, the average price target for Ambev was $2.81, suggesting an upside potential of approximately 19.03% from current levels [3]. Company Overview - Ambev S.A. is a Brazil-based brewer involved in the production, distribution, and sale of various beverages, including beer, draft beer, carbonated soft drinks, and other alcoholic and non-alcoholic drinks [4].