Intrinsic value of Anheuser-Busch InBev ADR - BUD

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$113.92

  Intrinsic Value

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  Value-price divergence*

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$113.92

 
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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of BUD stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 192.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  4.39
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  45,517
  44,476
  45,499
  46,668
  47,981
  49,436
  51,032
  52,770
  54,651
  56,678
  58,853
  61,180
  63,663
  66,307
  69,117
  72,098
  75,258
  78,602
  82,139
  85,876
  89,822
  93,985
  98,376
  103,004
  107,881
  113,016
  118,424
  124,116
  130,105
  136,406
  143,033
Variable operating expenses, $m
 
  22,286
  22,649
  23,064
  23,529
  24,045
  24,612
  25,228
  25,896
  26,615
  27,387
  21,706
  22,587
  23,525
  24,522
  25,580
  26,701
  27,887
  29,142
  30,468
  31,868
  33,345
  34,903
  36,545
  38,275
  40,097
  42,016
  44,035
  46,160
  48,396
  50,747
Fixed operating expenses, $m
 
  8,119
  8,322
  8,530
  8,743
  8,962
  9,186
  9,416
  9,651
  9,892
  10,140
  10,393
  10,653
  10,919
  11,192
  11,472
  11,759
  12,053
  12,354
  12,663
  12,979
  13,304
  13,637
  13,977
  14,327
  14,685
  15,052
  15,429
  15,814
  16,210
  16,615
Total operating expenses, $m
  32,635
  30,405
  30,971
  31,594
  32,272
  33,007
  33,798
  34,644
  35,547
  36,507
  37,527
  32,099
  33,240
  34,444
  35,714
  37,052
  38,460
  39,940
  41,496
  43,131
  44,847
  46,649
  48,540
  50,522
  52,602
  54,782
  57,068
  59,464
  61,974
  64,606
  67,362
Operating income, $m
  12,882
  14,071
  14,528
  15,075
  15,708
  16,428
  17,234
  18,126
  19,104
  20,171
  21,327
  29,081
  30,423
  31,863
  33,402
  35,046
  36,798
  38,662
  40,643
  42,745
  44,974
  47,336
  49,837
  52,482
  55,279
  58,234
  61,356
  64,652
  68,131
  71,801
  75,672
EBITDA, $m
  16,359
  22,257
  22,753
  23,343
  24,027
  24,802
  25,668
  26,625
  27,674
  28,817
  30,056
  31,391
  32,827
  34,367
  36,013
  37,769
  39,640
  41,631
  43,745
  45,988
  48,367
  50,886
  53,552
  56,372
  59,353
  62,502
  65,828
  69,339
  73,044
  76,952
  81,073
Interest expense (income), $m
  3,279
  1,698
  1,760
  1,840
  1,930
  2,031
  2,144
  2,267
  2,402
  2,547
  2,704
  2,872
  3,052
  3,244
  3,448
  3,666
  3,896
  4,140
  4,399
  4,672
  4,961
  5,266
  5,588
  5,928
  6,286
  6,663
  7,060
  7,478
  7,918
  8,381
  8,868
Earnings before tax, $m
  4,334
  12,373
  12,768
  13,235
  13,778
  14,397
  15,090
  15,859
  16,703
  17,624
  18,623
  26,209
  27,371
  28,619
  29,954
  31,381
  32,902
  34,522
  36,244
  38,073
  40,013
  42,070
  44,248
  46,554
  48,993
  51,572
  54,296
  57,174
  60,213
  63,420
  66,803
Tax expense, $m
  1,613
  3,341
  3,447
  3,573
  3,720
  3,887
  4,074
  4,282
  4,510
  4,758
  5,028
  7,076
  7,390
  7,727
  8,088
  8,473
  8,884
  9,321
  9,786
  10,280
  10,804
  11,359
  11,947
  12,570
  13,228
  13,924
  14,660
  15,437
  16,257
  17,123
  18,037
Net income, $m
  1,241
  9,032
  9,321
  9,662
  10,058
  10,510
  11,016
  11,577
  12,193
  12,865
  13,595
  19,132
  19,981
  20,892
  21,867
  22,908
  24,018
  25,201
  26,458
  27,793
  29,210
  30,711
  32,301
  33,984
  35,765
  37,647
  39,636
  41,737
  43,955
  46,296
  48,767

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  14,238
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  258,381
  130,047
  133,038
  136,457
  140,296
  144,549
  149,216
  154,298
  159,799
  165,725
  172,085
  178,889
  186,149
  193,880
  202,095
  210,813
  220,052
  229,831
  240,172
  251,100
  262,637
  274,811
  287,649
  301,182
  315,440
  330,458
  346,269
  362,911
  380,423
  398,847
  418,226
Adjusted assets (=assets-cash), $m
  244,143
  130,047
  133,038
  136,457
  140,296
  144,549
  149,216
  154,298
  159,799
  165,725
  172,085
  178,889
  186,149
  193,880
  202,095
  210,813
  220,052
  229,831
  240,172
  251,100
  262,637
  274,811
  287,649
  301,182
  315,440
  330,458
  346,269
  362,911
  380,423
  398,847
  418,226
Revenue / Adjusted assets
  0.186
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
Average production assets, $m
  60,360
  50,391
  51,550
  52,875
  54,363
  56,011
  57,819
  59,788
  61,920
  64,216
  66,681
  69,317
  72,130
  75,126
  78,309
  81,687
  85,267
  89,056
  93,063
  97,298
  101,768
  106,485
  111,460
  116,704
  122,229
  128,048
  134,174
  140,623
  147,409
  154,548
  162,057
Working capital, $m
  2,945
  -11,430
  -11,693
  -11,994
  -12,331
  -12,705
  -13,115
  -13,562
  -14,045
  -14,566
  -15,125
  -15,723
  -16,361
  -17,041
  -17,763
  -18,529
  -19,341
  -20,201
  -21,110
  -22,070
  -23,084
  -24,154
  -25,283
  -26,472
  -27,725
  -29,045
  -30,435
  -31,898
  -33,437
  -35,056
  -36,760
Total debt, $m
  122,743
  45,140
  47,168
  49,486
  52,088
  54,972
  58,136
  61,582
  65,311
  69,329
  73,642
  78,255
  83,177
  88,418
  93,989
  99,899
  106,163
  112,793
  119,805
  127,214
  135,036
  143,290
  151,994
  161,169
  170,837
  181,018
  191,738
  203,022
  214,895
  227,387
  240,525
Total liabilities, $m
  187,042
  88,172
  90,200
  92,518
  95,120
  98,004
  101,168
  104,614
  108,343
  112,361
  116,674
  121,287
  126,209
  131,450
  137,021
  142,931
  149,195
  155,825
  162,837
  170,246
  178,068
  186,322
  195,026
  204,201
  213,869
  224,050
  234,770
  246,054
  257,927
  270,419
  283,557
Total equity, $m
  71,339
  41,875
  42,838
  43,939
  45,175
  46,545
  48,048
  49,684
  51,455
  53,363
  55,411
  57,602
  59,940
  62,429
  65,075
  67,882
  70,857
  74,006
  77,336
  80,854
  84,569
  88,489
  92,623
  96,981
  101,572
  106,407
  111,499
  116,857
  122,496
  128,429
  134,669
Total liabilities and equity, $m
  258,381
  130,047
  133,038
  136,457
  140,295
  144,549
  149,216
  154,298
  159,798
  165,724
  172,085
  178,889
  186,149
  193,879
  202,096
  210,813
  220,052
  229,831
  240,173
  251,100
  262,637
  274,811
  287,649
  301,182
  315,441
  330,457
  346,269
  362,911
  380,423
  398,848
  418,226
Debt-to-equity ratio
  1.721
  1.080
  1.100
  1.130
  1.150
  1.180
  1.210
  1.240
  1.270
  1.300
  1.330
  1.360
  1.390
  1.420
  1.440
  1.470
  1.500
  1.520
  1.550
  1.570
  1.600
  1.620
  1.640
  1.660
  1.680
  1.700
  1.720
  1.740
  1.750
  1.770
  1.790
Adjusted equity ratio
  0.243
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,241
  9,032
  9,321
  9,662
  10,058
  10,510
  11,016
  11,577
  12,193
  12,865
  13,595
  19,132
  19,981
  20,892
  21,867
  22,908
  24,018
  25,201
  26,458
  27,793
  29,210
  30,711
  32,301
  33,984
  35,765
  37,647
  39,636
  41,737
  43,955
  46,296
  48,767
Depreciation, amort., depletion, $m
  3,477
  8,186
  8,224
  8,269
  8,318
  8,373
  8,433
  8,499
  8,570
  8,647
  8,729
  2,311
  2,404
  2,504
  2,610
  2,723
  2,842
  2,969
  3,102
  3,243
  3,392
  3,550
  3,715
  3,890
  4,074
  4,268
  4,472
  4,687
  4,914
  5,152
  5,402
Funds from operations, $m
  3,879
  17,218
  17,545
  17,930
  18,376
  18,883
  19,449
  20,076
  20,763
  21,512
  22,324
  21,443
  22,385
  23,396
  24,477
  25,631
  26,861
  28,169
  29,560
  31,036
  32,602
  34,260
  36,017
  37,875
  39,839
  41,915
  44,109
  46,425
  48,869
  51,448
  54,168
Change in working capital, $m
  -6,231
  -224
  -263
  -301
  -337
  -374
  -410
  -447
  -483
  -521
  -559
  -598
  -638
  -679
  -722
  -766
  -812
  -860
  -909
  -960
  -1,014
  -1,070
  -1,128
  -1,189
  -1,253
  -1,320
  -1,390
  -1,463
  -1,539
  -1,619
  -1,703
Cash from operations, $m
  10,110
  16,664
  17,808
  18,231
  18,714
  19,257
  19,859
  20,522
  21,246
  22,033
  22,883
  22,041
  23,023
  24,075
  25,199
  26,397
  27,673
  29,029
  30,469
  31,997
  33,616
  35,330
  37,145
  39,064
  41,092
  43,235
  45,498
  47,887
  50,408
  53,067
  55,872
Maintenance CAPEX, $m
  0
  -1,647
  -1,680
  -1,718
  -1,763
  -1,812
  -1,867
  -1,927
  -1,993
  -2,064
  -2,141
  -2,223
  -2,311
  -2,404
  -2,504
  -2,610
  -2,723
  -2,842
  -2,969
  -3,102
  -3,243
  -3,392
  -3,550
  -3,715
  -3,890
  -4,074
  -4,268
  -4,472
  -4,687
  -4,914
  -5,152
New CAPEX, $m
  -4,979
  -984
  -1,159
  -1,325
  -1,487
  -1,648
  -1,808
  -1,969
  -2,132
  -2,296
  -2,464
  -2,637
  -2,813
  -2,995
  -3,183
  -3,378
  -3,580
  -3,789
  -4,007
  -4,234
  -4,471
  -4,717
  -4,975
  -5,244
  -5,525
  -5,819
  -6,127
  -6,449
  -6,786
  -7,139
  -7,509
Cash from investing activities, $m
  -60,077
  -2,631
  -2,839
  -3,043
  -3,250
  -3,460
  -3,675
  -3,896
  -4,125
  -4,360
  -4,605
  -4,860
  -5,124
  -5,399
  -5,687
  -5,988
  -6,303
  -6,631
  -6,976
  -7,336
  -7,714
  -8,109
  -8,525
  -8,959
  -9,415
  -9,893
  -10,395
  -10,921
  -11,473
  -12,053
  -12,661
Free cash flow, $m
  -49,967
  14,033
  14,969
  15,188
  15,464
  15,797
  16,184
  16,626
  17,122
  17,672
  18,278
  17,182
  17,900
  18,676
  19,511
  20,409
  21,370
  22,397
  23,493
  24,661
  25,902
  27,221
  28,621
  30,105
  31,677
  33,342
  35,104
  36,966
  38,935
  41,015
  43,211
Issuance/(repayment) of debt, $m
  62,675
  1,599
  2,028
  2,318
  2,603
  2,884
  3,164
  3,445
  3,730
  4,018
  4,312
  4,613
  4,923
  5,241
  5,570
  5,911
  6,264
  6,630
  7,012
  7,409
  7,822
  8,254
  8,704
  9,175
  9,667
  10,182
  10,720
  11,283
  11,873
  12,491
  13,139
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  59,181
  1,599
  2,028
  2,318
  2,603
  2,884
  3,164
  3,445
  3,730
  4,018
  4,312
  4,613
  4,923
  5,241
  5,570
  5,911
  6,264
  6,630
  7,012
  7,409
  7,822
  8,254
  8,704
  9,175
  9,667
  10,182
  10,720
  11,283
  11,873
  12,491
  13,139
Total cash flow (excl. dividends), $m
  9,935
  15,632
  16,997
  17,506
  18,067
  18,680
  19,348
  20,071
  20,852
  21,690
  22,590
  21,795
  22,822
  23,917
  25,081
  26,319
  27,634
  29,028
  30,505
  32,069
  33,724
  35,475
  37,325
  39,280
  41,345
  43,524
  45,824
  48,250
  50,808
  53,506
  56,350
Retained Cash Flow (-), $m
  -29,202
  -791
  -963
  -1,101
  -1,236
  -1,370
  -1,503
  -1,636
  -1,771
  -1,908
  -2,048
  -2,191
  -2,338
  -2,489
  -2,645
  -2,807
  -2,975
  -3,149
  -3,330
  -3,519
  -3,715
  -3,920
  -4,134
  -4,358
  -4,591
  -4,836
  -5,091
  -5,359
  -5,639
  -5,932
  -6,240
Prev. year cash balance distribution, $m
 
  1,053
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  15,894
  16,034
  16,405
  16,831
  17,311
  17,845
  18,435
  19,080
  19,782
  20,542
  19,604
  20,484
  21,428
  22,436
  23,512
  24,659
  25,879
  27,175
  28,551
  30,009
  31,555
  33,191
  34,923
  36,753
  38,688
  40,732
  42,891
  45,169
  47,574
  50,110
Discount rate, %
 
  6.30
  6.62
  6.95
  7.29
  7.66
  8.04
  8.44
  8.86
  9.31
  9.77
  10.26
  10.78
  11.31
  11.88
  12.47
  13.10
  13.75
  14.44
  15.16
  15.92
  16.72
  17.55
  18.43
  19.35
  20.32
  21.33
  22.40
  23.52
  24.70
  25.93
PV of cash for distribution, $m
 
  14,952
  14,106
  13,412
  12,700
  11,970
  11,220
  10,453
  9,671
  8,880
  8,085
  6,694
  5,999
  5,319
  4,661
  4,032
  3,441
  2,895
  2,398
  1,953
  1,564
  1,228
  946
  714
  527
  380
  267
  183
  122
  79
  50
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Anheuser-Busch InBev SA/NV, a brewing company, engages in the production, distribution, and sale of beer, alcoholic beverages, and soft drinks worldwide. It offers a portfolio of approximately 200 beer brands, including Budweiser, Corona, Stella Artois, Beck’s, Leffe, Hoegaarden, Bud Light, Skol, Brahma, Antarctica, Quilmes, Victoria, Modelo Especial, Michelob Ultra, Harbin, Sedrin, Klinskoye, Sibirskaya Korona, Chernigivske, Cass, and Jupiler. The company was founded in 1366 and is headquartered in Leuven, Belgium.

FINANCIAL RATIOS  of  Anheuser-Busch InBev ADR (BUD)

Valuation Ratios
P/E Ratio 177.5
Price to Sales 4.8
Price to Book 3.1
Price to Tangible Book
Price to Cash Flow 21.8
Price to Free Cash Flow 42.9
Growth Rates
Sales Growth Rate 4.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 4.8%
Cap. Spend. - 3 Yr. Gr. Rate 5.2%
Financial Strength
Quick Ratio 2
Current Ratio 0.4
LT Debt to Equity 159.7%
Total Debt to Equity 172.1%
Interest Coverage 2
Management Effectiveness
Return On Assets 1.7%
Ret/ On Assets - 3 Yr. Avg. 5.6%
Return On Total Capital 0.9%
Ret/ On T. Cap. - 3 Yr. Avg. 6.2%
Return On Equity 2.2%
Return On Equity - 3 Yr. Avg. 12.8%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 60.9%
Gross Margin - 3 Yr. Avg. 60.6%
EBITDA Margin 24.4%
EBITDA Margin - 3 Yr. Avg. 35.4%
Operating Margin 28.3%
Oper. Margin - 3 Yr. Avg. 31.1%
Pre-Tax Margin 9.5%
Pre-Tax Margin - 3 Yr. Avg. 22.5%
Net Profit Margin 2.7%
Net Profit Margin - 3 Yr. Avg. 13.8%
Effective Tax Rate 37.2%
Eff/ Tax Rate - 3 Yr. Avg. 25.4%
Payout Ratio 680.9%

BUD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BUD stock intrinsic value calculation we used $43604 million for the last fiscal year's total revenue generated by Anheuser-Busch InBev ADR. The default revenue input number comes from 2016 income statement of Anheuser-Busch InBev ADR. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our BUD stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 6.3%, whose default value for BUD is calculated based on our internal credit rating of Anheuser-Busch InBev ADR, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Anheuser-Busch InBev ADR.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of BUD stock the variable cost ratio is equal to 50.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $7921 million in the base year in the intrinsic value calculation for BUD stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.9% for Anheuser-Busch InBev ADR.

Corporate tax rate of 27% is the nominal tax rate for Anheuser-Busch InBev ADR. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the BUD stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for BUD are equal to 113.3%.

Life of production assets of 37.2 years is the average useful life of capital assets used in Anheuser-Busch InBev ADR operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for BUD is equal to -25.7%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $42137 million for Anheuser-Busch InBev ADR - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 1692.47 million for Anheuser-Busch InBev ADR is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Anheuser-Busch InBev ADR at the current share price and the inputted number of shares is $192.8 billion.


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Stock chart of BUD Financial statements of BUD Annual reports of BUD
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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