Anheuser-Busch Stock Rallies—Is the King of Beers Back?

Core Insights - Anheuser-Busch InBev's stock experienced a significant increase following its quarterly earnings report, indicating a positive momentum for long-term shareholders [1] - The company reported a record annual revenue of $59.8 billion, surpassing the previous year's record of$59.4 billion, with a 2.5% year-over-year increase in fourth-quarter revenue [1][3] - Despite a slight decline in overall volume, revenue growth was attributed to increased sales of premium brands such as Corona, Michelob ULTRA, and Stella Artois [2][3] Revenue and Earnings Performance - Anheuser-Busch achieved a 4% increase in earnings per share (EPS) for the full year 2024, indicating strong pricing power despite lower overall volume [3] - The flagship Budweiser brand saw a remarkable 50% year-over-year volume increase in Brazil, showcasing regional strength [3] Market Trends and Consumer Behavior - The alcohol industry faces challenges from societal trends, including the impact of GLP-1 weight-loss drugs and a shift among Gen-Z consumers towards alcohol alternatives [5][6] - Despite these challenges, beer remains the preferred alcoholic beverage, holding 47.2% of the market share, with Anheuser-Busch expanding into no-alcohol and beyond beer categories [6] Valuation and Stock Performance - Anheuser-Busch's current forward price-to-earnings (P/E) ratio is around 17x, with a price-to-sales ratio of 1.7, reflecting valuations similar to those in 2020 [7] - The stock recently broke above its 200-day simple moving average, a bullish indicator, with a consensus price target of $64, approximately 5$1.00 per share, a 14% year-over-year increase [9][10] - The company's annual dividend payments constitute less than 33% of its annual free cash flow, indicating a strong cash position while also engaging in a $2 billion share buyback program [10]