Heineken Earnings: Volume Still Weak, but Relief Is on the Horizon

For the second consecutive quarter, Heineken reported that consumers were balking at the steep price increases that it has implemented over the last 18 months. It now seems unlikely that the brewer will achieve our volume estimates this year, so we have modestly lowered our forecasts in some regions. However, the price increases pushed through this year mean that revenue is still likely to grow modestly, in line with our forecasts, and management has not changed its full-year outlook. We retain our EUR 96 fair value estimate and narrow moat rating. The market shrugged off the report; it seems the stock was already pricing in the slowdown in growth. The shares now trade at a 10% discount to our fair value estimate as of the Oct. 25 close.