What's in the Offing for AB InBev (BUD) in Q3 Earnings?

Anheuser-Busch InBev SA/NV BUD, also known as AB InBev, is slated to release third-quarter 2020 results on Oct 29. In the last reported quarter, the company delivered an earnings surprise of 48.4%. However, its earnings missed the Zacks Consensus Estimate by 26.2%, on average, in the trailing four quarters.

The Zacks Consensus Estimate for AB InBev’s third-quarter earnings is pegged at 73 cents per share, suggesting a decline of 40.2% from the year-ago quarter. The consensus estimate has declined by 2.7% in the past 30 days. For third-quarter revenues, the consensus mark is pegged at $11.6 billion, suggesting an 11.7% decline from the prior-year reported figure.

Key Factors to Note

AB InBev has been witnessing greater impacts of the outbreak on its results over the past few quarters. Operational deleverage in volumes due to the pandemic mostly on the closure of beer operations in many regions has been hurting cost of sales. Moreover, organic volume declines due to softness in its three global brands are likely to have hurt revenues in the to-be-reported. Also, margin declines due to escalated pandemic-related costs are likely to have persisted in the third quarter.

AnheuserBusch InBev SANV Price and EPS Surprise

AnheuserBusch InBev SANV price-eps-surprise | AnheuserBusch InBev SANV Quote

However, with the gradual reopening of the on-premise channels across many countries, the company’s volume trends are expected to have gained momentum in the third quarter. Additionally, its investment behind B2B platforms, e-commerce channels and digital marketing have accelerated in the past few months, which is likely to have aided sales in the to-be-reported quarter. Further, an uplift of beer sales in the off-premise channel and growth in revenue per hl have been aiding sales trends in the United States.

Additionally, the company has been witnessing positive trends in the China markets since mid-March. While it has been seeing a steady recovery in the in-home and restaurant channels in China, the nightlife channel recovery has been slow-paced. In the second quarter, the in-home channel delivered volume growth in high-single digits, with strong growth in the e-commerce channel. Further, the on-premise channel in China has been witnessing sales rates consistent with the prior-year quarter, as nearly 90% of restaurants were open by the end of June. The persistence of these trends is likely to have contributed to positive results in the third quarter.

Zacks Model

Our proven model doesn’t conclusively predict earnings beat for AB InBev this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

AB InBev has a Zacks Rank #4 (Sell) and Earnings ESP of 0.00%.

Stocks Poised to Beat Earnings Estimates

Here are some companies that you may want to consider as our model shows that these have the right combination of elements to deliver an earnings beat.

Nu Skin Enterprises, Inc. NUS presently has an Earnings ESP of +3.54% and it sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Newell Brands Inc. NWL currently has an Earnings ESP of +0.33% and a Zacks Rank #2.

The Coca-Cola Company KO has an Earnings ESP of +1.26% and a Zacks Rank #3 at present.

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