Anheuser-Busch InBev SA/NV BUD, aka AB InBev, has encountered a notable resistance level, prompting caution among investors from a technical standpoint. BUD has been trading below the 200-day and 50-day simple moving averages (SMAs) for quite some time now, suggesting a bearish trend.

Currently, at $50.07, BUD remains below its 200-day and 50-day SMAs of $60.25 and $55.74, respectively, indicating a possible sustained downward trend.

BUD Stock's 200-Day & 50-Day Moving Average

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BUD has faced significant headwinds recently, underperforming the Zacks Beverages - Alcohol industry. In the past three months, BUD shares have lost 24.5% compared with the industry's decline of 16.4%, highlighting company-specific challenges.

BUD Stock's Price Performance

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Factors Behind AB InBev’s Stock Decline

AB InBev continues to face elevated costs stemming from a high commodity cost environment and strategic investments to support its long-term growth initiatives. In the third quarter of 2024, the cost of sales declined on a reported basis but increased organically. This organic increase was primarily driven by commodity cost inflation and elevated supply chain expenses in certain markets, partially offset by the company's improved pricing strategies.

The beer and beverage industry remains highly sensitive to changes in taxation, with taxes forming a significant portion of the cost of beer charged to consumers in many regions. Any increase in excise or indirect taxes on AB InBev's products could lead to shifts in consumer preferences toward other beverages, impacting the overall consumption of its products and affecting revenues and margins. For 2024, the company expects a normalized effective tax rate in the range of 27% to 29%.

Do BUD’s Strategic Initiatives Hold Potential?

Despite challenges, AB InBev is strategically positioned, thanks to its pricing actions, continued premiumization and other revenue-management initiatives that have supported revenue growth. Strong business momentum, driven by relentless execution, brand investments and accelerated digital transformation, has further bolstered top-line performance.

Premiumization of the beer industry has been a key growth opportunity for AB InBev. The company has been investing to develop a diverse portfolio of global, international and crafts and specialty premium brands in its markets. Apart from the premium brands, the company’s global brands lead the way in premiumization. The company’s above-core portfolio continues to perform well, with revenues rising in the third quarter, led by Corona.

AB InBev continues to expand its Beyond Beer portfolio, which includes ready-to-drink beverages such as canned wine, canned cocktails, hard seltzers, cider and flavored malt beverages. This portfolio aligns with the growing demand for low-alcohol and non-alcoholic drinks, contributing positively to the company's top line.

AB InBev has been investing in new capabilities to enhance its connection with customers and consumers, with a strong focus on growing its digital platform. The company has seen an acceleration in B2B sales, e-commerce and digital marketing trends, aiding recent growth. B2B digital platforms contributed a significant portion to revenues, with BEES reaching 3.9 million active users and generating $12.1 billion in gross merchandise value.

Final Words on BUD Stock

Shares of AB InBev have faced significant challenges recently, underperforming the industry. Elevated costs, driven by high commodity prices and ongoing investments to support long-term growth, have weighed on its performance. However, this does not mean the company lacks potential. 

With its strategic initiatives, focus on premiumization and expansion into the Beyond Beer portfolio, AB InBev is positioning itself for future growth. The recent stock price decline might be an attractive entry point for potential investors. That said, with margins yet to fully recover, AB InBev carries an element of caution. Currently, BUD has a Zacks Rank #3 (Hold).

Don’t Miss These Solid Bets

We highlighted some better-ranked stocks from the broader Consumer Staples space, namely Ingredion INGR, Freshpet, Inc. FRPT and Vita Coco Company COCO.

Ingredion is a solutions provider specializing in nature-based sweeteners, starches and nutrition ingredients. It currently has a Zacks Rank #2 (Buy). INGR has a trailing four-quarter earnings surprise of 9.5%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Ingredion’s current financial-year EPS indicates growth of 12.4% from the year-ago reported numbers.

Freshpet, together with its subsidiaries, manufactures, distributes and markets natural fresh meals and treats for dogs and cats, currently carrying a Zacks Rank of 2. FRPT delivered an earnings surprise of 144.5% in the last reported quarter.

The Zacks Consensus Estimate for Freshpet’s current fiscal year’s sales and earnings implies growth of 27.2% and 228.6%, respectively, from the year-ago reported number.

Vita Coco develops, markets and distributes coconut water products under the Vita Coco brand name in the United States, Canada, Europe, the Middle East, Africa and the Asia Pacific. The company currently has a Zacks Rank of 2. COCO has a trailing four-quarter earnings surprise of 17.6%, on average.

The Zacks Consensus Estimate for COCO’s current financial-year sales and earnings suggests growth of 3.8% and 29.7%, respectively, from the year-ago reported figures.

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Anheuser-Busch InBev SA/NV (BUD) : Free Stock Analysis Report

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