The beer market has been expanding rapidly in the emerging economies over the past few years due to the rising levels of disposable income, the continuing adoption of Western culture, and the growing prevalence of alcohol-based socialization. In addition, the alcohol e-commerce channel, which gained traction amid the COVID-19 pandemic, is here to stay and is expected to magnify the market’s prospects in the coming years.
Furthermore, beer has gained immense popularity among millennials and GenZ consumers, relative to other alcoholic beverages, owing to its diversified flavors and low alcohol content. The global beer market is expected to reach $989.48 billion in 2028, growing at a 3.7% CAGR.
Given this backdrop, we think beer stocks Ambev S.A. (ABEV), Compañía Cervecerías Unidas S.A. (CCU), and Kirin Holdings Company, Limited (KNBWY), which pay dividends, could be solid additions to one’s portfolio.
Ambev S.A. (ABEV)
Headquartered in Sao Paulo, Brazil, ABEV and its subsidiaries produce, distribute, and sell beer, draft beer, carbonated soft drinks, other non-alcoholic beverages, malt, and food products in the Americas. It operates through four segments: Brazil; Central America and the Caribbean; Latin America South; and Canada.
ABEV’s $0.08 annual dividend yields 2.71% at its current share price.
ABEV’s net revenue increased 18.6% year-over-year to R$22.01 billion ($4.70 billion) in its fiscal fourth quarter, ended Dec. 31, 2021. Its gross profit grew 11.2% from its year-ago value to R$11.51 billion ($2.46 billion). The company’s cash flow from operating activities increased 40.5% year-over-year to R$11.79 billion ($2.52 billion).
ABEV’s revenue is expected to come in at $3.64 billion for its fiscal quarter ended March 31, 2022, indicating a 15.5% increase year-over-year. Also, the company’s revenue is expected to grow 17.8% year-over-year to $16.77 billion in its current fiscal year. Also, it has an impressive earnings surprise history; it topped the Street’s EPS estimates in each of the trailing four quarters.
Over the past six months, the stock has gained 11.5% in price to close yesterday’s trading session at $3.11. The stock gained 11.1% year-to-date.
ABEV’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, translating to Buy in our POWR ratings system. The POWR ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
ABEV also has a B grade in Quality and Sentiment. It is ranked #12 of 37 stocks in the B-rated Beverages industry.
Beyond what is stated above, we have also rated ABEV for Momentum, Stability, Value, and Growth. Get all the ABEV ratings here.
Compañía Cervecerías Unidas S.A. (CCU)
Based in Santiago, Chile, CCU is a beverage company that produces and sells alcoholic and non-alcoholic beer under proprietary and licensed brands. The company operates through three segments: Chile; International Business; and Wine.
Its $2.10 annual dividend yields 14.93% at its current share price. On Oct. 20, 2021, CCU declared a semi-annual dividend of $1.06 per share, which was payable on Dec. 15, 2021. Its dividend payouts have increased at a 53.1% CAGR over the past three years and 34.8% over the past five years.
CCU’s sales revenue increased 37.1% from the prior-year quarter to CLP$822.35 billion ($1.01 billion) in its fiscal fourth quarter. Its gross margin for the quarter came in at CLP$390.78 billion ($0.48 billion), reflecting a 32.3% increase year-over-year, while its income before taxes stood at CLP$110.57 billion ($0.14 billion), up 43.7% year-over-year.
Analysts expect CCU’s revenue for the fiscal quarter ending June 30, 2022, to come in at $608.25 million, indicating a marginal increase year-over-year. Also, the company’s revenue is expected to grow 1.1% year-over-year to $3.07 billion in the current fiscal year. CCU also beat the consensus EPS estimates in three of the trailing four quarters.
The stock has gained marginally intraday to close the last trading session at $14.19.
It is no surprise that CCU has an overall A rating, which equates to Strong Buy in our POWR Ratings system.
CCU has a B grade in Value, Quality, Stability, and Sentiment. It is ranked #4 in the Beverages industry.
In addition to the POWR Rating grades I have just highlighted, one can see the CCU’s ratings for Growth and Momentum here.
Kirin Holdings Company, Limited (KNBWY)
Headquartered in Tokyo, KNBWY produces and sells alcoholic beverages, soft drinks, pharmaceuticals, and other related products in Japan and internationally. It operates through four segments: Japan Beer and Spirits Businesses; Japan Non-Alcoholic Beverages Business; Oceania Integrated Beverages Business; and Pharmaceuticals Business.
KNBWY’s $0.56 annual dividend yields 3.75% at its current share price. The company paid its last semi-annual dividend of $0.30 on Sept. 13, 2021. Its dividend payouts have increased at a 7% CAGR over the past three years and 9% over the past five years.
For the fiscal year ended Dec. 31, 2021, KNBWY’s gross profit increased 2.4% year-over-year to ¥1,821.57 billion ($14.37 billion), while its comprehensive income grew 27.7% from its year-ago value to ¥117.32 billion ($0.93 billion). Its cash flow from operating activities was ¥219.30 billion ($1.73 billion), up 33% from the previous year.
The Street expects KNBWY’s EPS for its fiscal year ending Dec. 31, 2022, to improve 124.5% year-over-year to $1.39. The $15.05 billion consensus revenue estimate for the same period represents a 1,214.3% increase year-over-year.
KNBWY’s shares have slumped 1% in price over the past five days to close the last trading session at $13.87.
KNBWY’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system.
It has an A grade in Value and a B in Stability and Quality and is ranked #8 in the Beverages industry.
To see additional POWR Ratings for Momentum, Growth, and Sentiment for KNBWY, click here.
ABEV shares were trading at $3.09 per share on Tuesday morning, down $0.02 (-0.64%). Year-to-date, ABEV has gained 10.36%, versus a -6.36% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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