Joe Raedle
Anheuser-Busch InBev SA/NV (BUD) demonstrated solid financial performance in the second quarter of 2023 and showed positive sales development. The company’s flagship brands, including Budweiser, Stella Artois and Corona, played a crucial role in this recovery and, most importantly, recorded strong sales growth outside of their home markets. However, despite the impressive sales results, the company reported a marginal decline in underlying profit in the second quarter compared to the same period last year, and a decline in overall volume was also observed. This article will conduct a technical study of Anheuser-Busch’s stock price to determine its upcoming performance and identify investment prospects. Observations suggest that the stock price is in a consolidation phase and is laying a solid foundation for a possible future uptrend.
A look at resilience and expansion in Anheuser-Busch’s latest financials
Anheuser Busch observed an increase of 7.2% Sales boost in the second quarter of 2023, combined with sales growth of 9.0% per hl. This positive trend continued in the first half of 2023, recording a sales increase of 10.0% and sales growth of 10.6% per hl. Global brands, including Budweiser, Stella Artois and Corona, particularly contributed to this upward trend, achieving an 18.4% increase in sales outside their home markets in the second quarter of 2023 and 16.9% in the first half of 2023.
Approximately 64% of the company’s revenue is generated through B2B digital platforms. The Company’s digital platform, BEES, has expanded its user base to 3.3 million monthly active users and generates over $115 million in revenue through the direct-to-consumer digital ecosystem. However, despite the promising sales indicators, underlying profit in the second quarter of 2023 was slightly lower than the second quarter of 2022, coming in at $1,452 million versus $1,468 million. In contrast, H23 saw an increase in underlying profit which stood at $2,762 million compared to $2,672 million in H22.
In the second quarter of 2023, the company reported a 1.4% decline in total volumes, with beer volumes declining 1.8%. Nevertheless, non-beer volumes recorded an increase of 0.5%. In the first half of 2023, there was a slight overall volume decline of 0.3%, with a 0.8% decline in own beer volumes and a 2.1% increase in non-beer volumes. Underlying EPS was $0.72 in 2Q2023, down slightly from $0.73 in 2Q2022, but up in 2Q23 from $1.33 in 22 . Half-year to 1.37 US dollars.
Despite the volume decline and slight underlying earnings decline, Anheuser-Busch maintains robust global momentum, with over 85% of the company’s markets reporting revenue growth. The company’s focus on strategic initiatives such as category leadership, digitization and monetization of its ecosystem, and business optimization has enabled it to achieve consistent growth and long-term value creation, with BEES generating gross merchandise value (GMV) of approximately $9.2 billion, which is one increase of 30%. Increase over Q2 2022. The chart below shows robust sales growth and shows the percentage change in quarterly sales.
Data from YCharts
In addition, efficient resource allocation and overhead management enabled Anheuser-Busch to invest approximately $2.1 billion in capital expenditures and $3.5 billion in sales and marketing in the first half of 2023, supporting the organic growth of its business. The company continues to deleverage, with net debt to EBITDA reaching 3.70x, down from 3.86x as of June 30, 2022. These strategic investments and disciplined management practices underscore the Company’s commitment to strengthening its market presence and increasing shareholder value in response to evolving market dynamics.
Exploring the nuances of technical pricing structures
The monthly chart for Anheuser-Busch illustrates the current technical market landscape where the price is undergoing consolidation in anticipation of the next move. Market analysis shows that a bottom has formed with a double bottom at $31.28 and $43.93 with the neck line at $75. This robust bullish pattern suggests possible price increases. However, the market continued to consolidate due to a sharply bearish candle in May 2023, delaying subsequent progress. Subsequent candles for June, July and August 2023 were depicted within the bars, indicating strong consolidation and price congestion in the market. These inside bars signal the market’s anticipation of the next significant move. However, the direction remains unconfirmed as the influence of the May 2023 monthly candle changes the market outlook. Additionally, the May 2023 candlestick caused the RSI to fall below the median value of 50, indicating a possible prolonged market consolidation before progress.
BUD monthly chart (stockcharts.com)
This price action is more pronounced on the weekly chart, which shows a flawless inverted head and shoulders, with the head at $43.93 and the shoulders at $49.93 and $52.93 and the neck line at $67. These patterns are predominantly bullish and highlight the likely bullish development if the neck line is clearly broken. However, despite the bullish pattern, a consolidating RSI below 50 increases the likelihood of further declines before the next move. Therefore, investors could consider a breakout at $67 before buying, or if the price drops to around $30, long positions could be opened.
BUD weekly chart (stockcharts.com)
Pronounced consolidations can similarly be observed in the short-term daily chart below, which depicts a triangle within which price is consolidating, leading to congestion. A triangle breakout could determine the further direction. Investors may be waiting for better timing to enter the market, but a break above $67 could increase the likelihood of a price increase.
BUD daily chart (stockcharts.com)
Market risk
Anheuser-Busch saw a decline in total volumes and a small decline in underlying profits in the second quarter of 2023. This continued decline in beer volumes and profitability, paradoxically accompanied by increasing revenues, could pose significant risks to the stability of the market and projected growth, making a careful and strategic market analysis essential. Furthermore, a look at the monthly, weekly and daily charts shows that the price of Anheuser-Busch is consolidating. This consolidation, marked by interior bars and triangles, suggests that a potentially significant market move is about to occur; However, the direction remains undetermined, which creates some uncertainty and risk for investors.
Furthermore, despite bullish patterns, the RSI is consolidating below 50, signaling the possibility of further declines before an upward move, a factor that can significantly influence investment decisions. In addition, the company generates around 64% of its sales through digital B2B platforms such as BEES. Although this platform has experienced a significant expansion of its user base, potential disruptions, security threats or advances by competitors in the digital space pose significant risk to Anheuser-Busch’s revenue structure and require vigilance and strategic foresight.
Bottom line
In summary, Anheuser-Busch demonstrated solid financial success in the second quarter of 2023, driven by renowned brands such as Budweiser, Stella Artois and Corona, coupled with a robust market presence and significant sales growth, despite declining profits and overall volumes indicating It operates in the complex market and operating environments in which the company operates. Critical leadership, digitalization and business optimization strategies were fundamental, with the BEES platform contributing significantly to the company’s value. However, current stock consolidation and unclear market patterns indicate potential risks and uncertainties that require careful and strategic consideration by investors and stakeholders. Anheuser-Busch’s commitment to disciplined management and efficient resource allocation demonstrates its steadfast approach to strengthening its market presence and increasing shareholder value under fluctuating market conditions. The juxtaposition of increasing sales and declining volumes and lower profitability underscores the need for appropriate investment and strategic foresight.
From a technical perspective, the stock price shows bullish formations, but a rise above $67 is necessary first to confirm the bullish head and shoulders reversal. The monthly candle for May 2023 has resulted in sideways consolidation in the stock price and investors may find it advisable to postpone investment decisions. However, if the stock price drops to $30, it could be seen as an opportune time to add to long positions.
Comments are closed.