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Economic Moat




Ambev Reports Respectable Q2 in the Circumstances; Much Upside Remains

Analyst Note

| Philip Gorham, CFA, FRM |

Ambev reported second-quarter results that beat our estimates on volumes, but margins were again slightly below forecast. The most likely explanation for this dynamic is that more consumption shifted from on-premise to at-home than we had estimated, and that this accentuated the negative mix effect on margins. We have adjusted our near-term assumptions accordingly, as these factors seem likely to be prevalent in at least the third quarter as well, but we retain our BRL 18 fair value estimate and our wide moat rating and think the stock is undervalued.

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Company Profile

Business Description

Ambev is the largest brewer in Latin America by volume and the fourth- largest beer producer in the world. It produces, distributes, and sells beer and PepsiCo products in Brazil and other Latin American countries. It also owns Argentina's largest brewer, Quinsa. Ambev was formed in 1999 through the merger of Brazil's two largest beverage firms, Brahma and Antarctica. In 2004, Ambev combined with Canadian brewer Labatt, giving Interbrew (now Anheuser-Busch InBev) a controlling interest.

Rua Dr. Renato Paes de Barros, 1017, 3rd Floor
Sao Paulo, SP, 04530-001, Brazil
T +55 1121221200
Sector Consumer Defensive
Industry Beverages - Brewers
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type
Employees 51,352