AMBEV S.A. (ABEV): what the price requires
The current priced-in claim for AMBEV S.A. (ABEV) is temporarily suppressed because the live engine record is unavailable. The dated report remains a snapshot, not a current market read.
Generated: 2026-07-13 · Source: https://boothcheck.com/report/ABEV
Headline
| Field | Value |
|---|---|
| Ticker | ABEV |
| Company | AMBEV S.A. |
| Current price | $3.06/sh |
| Composition | Brazil 56% / CAC (Central America and the Caribbean) 12% / Latin America - South 20% / Canada 12% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 9.0% |
| Operating margin today | 26.4% |
| Margin compression implied | -17.4pp |
| Multiple paid | 10x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.
Solve inputs: computed at a 8.6% cost of capital with 4% terminal growth over a 5-year stage.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -1.29σ |
| cohort percentile (of 69 peers) | 10 |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.09x | 5 | expensive |
| Earnings | 1.22x | 4 | expensive |
| Relative | 0.93x | 5 | justifies |
| Growth | 0.89x | 3 | justifies |
Families that justify the price: Asset, Earnings, Relative, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.0%); the inversion above states its own rate.
Per-Model Detail (n=17)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $5.13 | 0.60x | yes | FCF base $3.9B, growth 5% (input: historical growth), terminal g 4.0%, WACC 9.0%, 5yr projection |
| DCF Exit Multiple | Growth | $3.45 | 0.89x | yes | Exit EV/EBITDA: 8.1x / 10.1x / 12.1x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $4.41 | 0.69x | yes | P/E 22x (sector median), scenarios: 18.5x / 22.0x / 25.5x (bear / base = sector held flat / bull), EV/EBITDA 14x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $2.17 | 1.41x | yes | BV/sh $1.11, ROE (TTM) 18.0%, ke 9.3% |
| Two-Stage Excess Return | Asset | $2.99 | 1.02x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $2.32 | 1.32x | yes | Rev $25.8B, growth 5% (input: historical growth; tapered), Terminal P/S: 1.6x / 1.9x / 2.1x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $2.34 | 1.31x | yes | EPS $0.19, growth 6% (input: historical EPS growth), PEG=2.75 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $2.27 | 1.35x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $3.87B × (1−21%) / WACC 9.0% → EPV (no growth) |
| Residual Income | Asset | $2.97 | 1.03x | yes | BV $1.11 + 5yr PV of (ROE (TTM) 18.0% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $2.21 | 1.38x | yes | √(22.5 × EPS $0.19 × BVPS $1.11) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $4.20 | 0.73x | yes | EBITDA $4.57B × sector EV/EBITDA 14.0x |
| FCF Yield | Earnings | $2.80 | 1.09x | yes | FCF $3894.1M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $3.19 | 0.96x | yes | EPS $0.19 × (8.5 + 2×5.5%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $2.81 | 1.09x | yes | BV $1.11 × (ROIC 22.8% / WACC 9.0%) |
| P/Sales Sector | Relative | $3.30 | 0.93x | yes | Revenue $25.76B × sector P/S 2.0x |
| PEG Fair Value | Relative | $1.62 | 1.89x | yes | EPS $0.19 × (PEG 1.5 × growth 5.5% (input: historical EPS growth)) → PE 8.3x |
| Earnings Yield | Earnings | $2.10 | 1.46x | yes | EPS $0.19 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net cash | $3.3b |
| Net debt / NOPAT (after-tax) | -0.92x (net cash) |
| Net debt / operating income (pre-tax) | -0.73x (net cash) |
| Interest coverage | 5.3x |
| Share count CAGR (buyback) | -0.2% |
| Burning cash | no |
Bullet Takeaways
- At about $3.12 the stock trades near 10 times operating income, low enough that the price sits below what even a modest annual decline in operating profit would warrant. This is a value-and-asset-supported name, not a growth bet, and most valuation methods cluster around $2 to $5.
- The business is high-return and cash-rich: return on invested capital above 22%, return on equity around 18%, and a net cash position of roughly $3.3 billion. Ambev does not carry the leverage that usually makes an emerging-market name fragile; the fragility here is currency and macro, not the balance sheet.
- Q1 2026 was strong. Normalized EBITDA grew about 10% organically to R$7.6 billion, Brazil beer volumes rose 1.2% while the industry declined, and the EBITDA margin reached 33.6%. The stock jumped sharply on the print, and the board approved fresh interest-on-capital distributions.
Bull Case
The structural advantage is dominance, and in beer dominance is the moat. Ambev is the leading brewer across its markets, anchored in Brazil where, as its parent's own filing notes, the group holds the number one beer position by volume in one of the top five beer profit pools in the world (BUD FY2025 20-F, accession 0001193125-26-088105). Scale in beer compounds: the largest brewer has the deepest distribution into hundreds of thousands of small retailers, the strongest brand portfolio spanning mainstream to premium, and the lowest unit costs from owning the bottling and logistics network. That is why Ambev could grow Brazil beer volumes 1.2% in the first quarter of 2026 even as the broader Brazilian beer industry declined mid-single digits. Taking share while the market shrinks is the clearest sign a moat is intact.
The returns confirm the quality. Ambev earns a return on invested capital above 22% against a cost of capital around 9%, a spread that few consumer businesses anywhere sustain, and a return on equity near 18%. Those returns come with a fortress balance sheet rather than borrowed leverage: the company sits on roughly $3.3 billion more cash than debt, so it funds its dividends and reinvestment entirely from its own cash generation. The first quarter produced the strongest first-quarter operating cash flow in a decade, and management is converting that into shareholder returns through interest-on-capital distributions, with new tranches approved for the back half of 2026.
The operating momentum is broad, not just Brazilian. First-quarter normalized EBITDA grew 10.1% organically to R$7.6 billion with the margin reaching 33.6%, and the growth spanned regions: Latin America South grew EBITDA 12.2% with margin expansion, and Central America and the Caribbean grew EBITDA 13.6% with margins up 130 basis points. Digital platforms, the direct-to-retailer ordering systems, are scaling and adding a high-margin layer to the traditional beer business. So the bull case is a dominant, high-return, net-cash consumer franchise gaining share in a declining home market, growing double digits across its regions, and returning cash to owners, all available at roughly 10 times operating income. For a business of this quality, that is a low price.
Bear Case
The fragility in Ambev is not on the balance sheet, which holds net cash, but in everything that sits outside the company's control: currency, commodity costs, and the macro of the emerging markets it operates in. A US holder owns dollar-denominated receipts on a company that earns in Brazilian reais, Argentine pesos, and other volatile currencies, and that translation can erase a good operating year. The first quarter showed the mechanism directly: Brazil beer EBITDA margin contracted 60 basis points, and cash cost of goods per hectoliter rose 9%, both driven mainly by foreign-exchange and commodity headwinds. The company can grow volumes and revenue in local terms and still deliver less to a dollar investor when the real weakens, which it has done repeatedly over the years.
The demand backdrop in the core market is the second concern. The Brazilian beer industry declined mid-single digits in the quarter, and while Ambev gained share, a dominant player in a shrinking category is fighting the tide. Brazil is also a high-interest-rate, inflation-prone economy where consumer spending on beer is sensitive to disposable income, and a downturn there hits the segment that is 56% of the business. Ambev has limited ability to grow its way out of a weak home market because it is already the share leader, so incremental volume has to come from a category that is not growing.
The ownership structure is the quieter structural issue. Ambev is a controlled subsidiary within the AB InBev group, which means minority shareholders are along for the ride on capital-allocation and governance decisions made with the parent's interests in view, including the interest-on-capital distribution mechanism that is tax-driven and can vary. The valuation reflects all of this: the methods cluster around $2 to $5, and several land below the current price, with the DCF near $5 only because it credits modest growth and the relative and EV/EBITDA methods landing below $4. The stock is cheap, but cheap on a business permanently discounted for currency risk, a no-growth home category, and minority status under a controlling parent. The bear case is that those discounts are structural, not temporary, and that a strong quarter in local currency does not change any of them for a dollar investor.
Valuation
The starting point is how little the price asks. At about $3.12 (June 27, 2026) the market is paying roughly 10 times company-wide operating income, a multiple so low that the price sits below what even a 5% annual decline in operating profit would warrant. That is a bound rather than a solved point: the price embeds outright deterioration, so the question is simply whether Ambev declines, holds, or grows. Given that the company just grew EBITDA 10% organically and gained share in its core market, the embedded assumption of decline looks conservative, which is what makes the valuation interesting on the value side.
The valuation X-ray is unusually tight and unusually consistent, which is itself the signal. Almost every method lands in a narrow $2 to $5 band, and they span all four families: the asset methods (excess return near $2 to $3, ROIC-justified book near $3), the earnings-power methods (Earnings Power Value and capitalized FCF near $2.30 to $2.80), the relative methods (sector P/E near $4.40, EV/EBITDA near $4.20, P/sales near $3.30), and the growth methods (perpetual-growth DCF near $5). When asset, earnings, peer, and growth frames all converge in a tight band, the valuation is well-supported rather than dependent on a single optimistic method. This is the profile of a stable, cash-generative business priced reasonably, not a stretched growth bet.
The balance sheet strengthens the read rather than threatening it. Ambev carries net cash of about $3.3 billion, so there is no leverage risk to discount, and the high returns on capital, return on invested capital above 22%, mean the business creates value on every reinvested dollar. The honest conclusion is that on the fundamentals alone the stock looks inexpensive, with multiple methods supporting a value at or above the price. The discount that keeps it cheap is not about the business quality, it is the market pricing in Brazilian and Latin American currency and macro risk plus the minority position under a controlling parent. Whether the stock is a bargain or a value trap depends less on Ambev's operations, which are strong, than on a dollar investor's tolerance for the emerging-market and FX risk the price is compensating for.
Catalysts
The first-quarter 2026 report, presented on May 5, was a clear beat and sent the shares sharply higher. Normalized EBITDA grew 10.1% organically to R$7.6 billion, organic net revenue rose 8.1%, and the normalized EBITDA margin reached 33.6%, with the company reporting its strongest first-quarter operating cash flow in a decade. Brazil beer grew net revenue 9.6% and volumes 1.2% while the industry declined, and the regional segments outside Brazil grew EBITDA double digits with margin expansion. The board approved a second interest-on-capital tranche of about R$1.2 billion for July 2026 and a further distribution of roughly R$700 million by December.
The forward catalysts mix operations, macro, and one notable demand event. The items to watch are Brazil beer volume trends against a declining industry, the trajectory of FX and commodity costs that pressured Brazil margins in the quarter, the continued scaling of the digital direct-to-retailer platforms, and the cadence of interest-on-capital distributions that drive the cash return. The 2026 FIFA World Cup is a meaningful demand catalyst for beer in Ambev's markets, particularly Brazil, and a strong tournament can lift volumes in the back half of the year. The next quarterly report, due in late July or early August, will show whether the share gains and EBITDA growth are sustaining and whether the currency headwinds are easing. Continued organic growth with stabilizing margins would support the value case; a weaker real or a deeper consumer slowdown in Brazil would reinforce the discount.
Sources: Ambev Q1 2026 results, 6-K and earnings slides (stocktitan.net, investing.com); Rio Times Brazil-volumes coverage (riotimesonline.com); Ambev Q1 2026 earnings call transcript (investing.com).
Peer Cohorts (Per Segment, With Filing Citations)
Core business (reported)
- BUD (Anheuser-Busch InBev SA/NV)
- (no filing in the citation store)
- TAP (MOLSON COORS BEVERAGE CO)
- (no filing in the citation store)
- SAM (THE BOSTON BEER COMPANY, INC.)
- (no filing in the citation store)
- STZ (CONSTELLATION BRANDS, INC.)
- (no filing in the citation store)
- DEO (DIAGEO plc)
- (no filing in the citation store)
- MNST (Monster Beverage Corp)
- (no filing in the citation store)
- CELH (CELSIUS HOLDINGS, INC.)
- (no filing in the citation store)
- KDP (Keurig Dr Pepper Inc.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.