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If you’ve enjoyed a beer recently, chances are it was one of Anheuser-Busch InBev’s (NYSE: BUD) brews. The company is the world’s largest beer brewer with brands including Corona, Stella Artois, Budweiser and a variety of craft beer names that it has acquired in recent years.
In its latest fourth quarter, Anheuser-Busch earnings fell slightly while its revenues declined 10% amid a global economic slowdown. But there are still a lot of good reasons to invest in this beer powerhouse.
A Dominant Brand
Here’s why. Anheuser Busch is a huge company that dominates a large and broad swath of the beer market. It holds 25% of the global market and 46.4% of the American beer market. And, it is growing, though multiple acquisitions of craft breweries as well as its planned blockbuster purchase of SABMiller (OTC: SBMRY), the world’s second-largest beer brewer.
Yes, beer tastes evolve and microbrews have become more popular. But it’s hard to compete against such a major global brand. And when that brand is peddling something as fundamental as beer, it’s pretty certain that its business will continue to grow over time.
Anheuser-Busch earnings in the latest quarter illustrate that the beer business is not immune to economic slowdowns. The company’s recent performance has been bumpy and that’s been reflected in its stock price, which is down about 10% over the past year. But look at a longer-term stock chart and you’ll see the company’s shares have almost doubled over the past five years.
Anheuser-Busch seemed to show this long-term faith in its business when it reported earnings on Thursday and raised its quarterly dividend.
Revenues Step Up
For the full year, Anheuser-Busch earnings declined on steep cost of sales and some unfavorable currency adjustments, but revenue rose by a strong 7%, another sign of the company’s ability to grow over time.
Like the beer business, the Anheuser-Busch success story is really a pretty simple one. It has dominated global sales of an incredibly popular consumer staples product and continues to diversify its product base to keep up with evolving consumer trends.
The long-term prospects look good and the current weakness in the share price could be a good buying opportunity.
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