(ABV) AmBev – Brazilian Beverage Giant Provides BRIC Exposure with ADR

Companhia de Bebidas das Americas AmBev (ABV), based in São Paulo, is engaged in producing, distributing and selling beer, carbonated soft drinks and other non-alcoholic and non-carbonated products in many countries across the Americas. It maintains an agreement with PepsiCo International, Inc. to bottle, sell and distribute Pepsi products in Brazil and in other Latin American countries, including Lipton Ice Tea, Gatorade, H2OH!, Propel and Frutzzz.

In a recent Forbes.com article, author Ken Rapoza noted the dominance of Brazilian ADRs in his screening for BRIC stocks based on ValuEngine data. He also noted the following about AmBev: “It’s both a growth stock and a dividend stock, trading at 19 times forward earnings and paying dividend yields of around 3.75%. Year-to-date, Ambev has outperformed Molson Coors Brewing Company and Anheuser Busch-InBev. ”

ValuEngine has issued a BUY recommendation for AmBev on Jun. 14, 2011. Based on the information we have gathered and our resulting research, we feel that AmBev has the probability to OUTPERFORM average market performance for the next year. The company exhibits ATTRACTIVE company size, risk and 5-year annualized return.

Based on available data as of Jun. 14, 2011, we believe that ABV should be trading at $24.67. This makes ABV 27.38% overvalued. Fair Value indicates what we believe the stock should be trading at today if the stock market were perfectly efficient and everything traded at its true worth. For ABV, we base this on actual earnings per share (EPS) for the previous four quarters of $1.50, forecasted EPS for the next four quarters of $0.91, and correlations to the 30- year Treasury bond yield of 4.21%.

About valuengine

ValuEngine.com (VE) is a stock valuation and forecasting service founded by Ivy League finance academics. VE utilizes the most advanced quantitative techniques and analysis available. Our research team continues to develop, test, and improve the VE Stock Valuation Models and econometric models for forecasting stock price movement. In recent years, VE has expanded its research program to include portfolio construction and tracking products. Our primary products are this website for individual investors and ValuEngine Institutional (VEI), a software package for equity fund managers and other financial professionals. Until recently, access to the VE Institutional stock valuation, risk management, and forecasting technology was only available to financial professionals in the United States. Now, the individual investor planning for their own financial future and managing their own portfolio can utilize the same types of tools that are used by financial professionals managing billions of dollars in assets every business day.


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