If you went to college in Washington, D.C., you know The Brickskeller. For those not so lucky, it's a bar/restaurant with a truly amazing selection of beers (as well as the best jukebox in town). If a country makes a beer and is allowed to trade with the U.S., I'm willing to bet that The Brickskeller has it or can get it.
So why do I mention this? Well, in the past I've spoken about companies such as Anheuser-Busch
It was a solid year for this global brewer. Revenue rose about 19% as reported, and although reported operating profit rose just 1%, adjusting both years for "exceptional items" boosts the growth to more than 21%. Likewise, EBITDA rose about 22%, and while reported beer volume growth of 19% was inflated by acquisitions, organic growth of 5% was quite good in its own right.
Like just about everybody else, SABMiller is having troubles in the U.S. market. North American earnings before interest, taxes, and amortization fell 7% on a 1% drop in volumes as the company continues to face weak market demand, heavier discounting and promotion from rivals, and higher input costs in items such as cans and packaging.
What I like about SABMiller, though, is that the U.S. is only a piece of the pie -- it contributes only slightly more than Latin America and Africa/Asia and less than Europe and South Africa. And while the company had some challenges late in the year in Latin America, the acquisition of Bavaria SA should make an already formidable competitor even stronger. Consider as well the potential in Asia -- volume in China was up 17% this year, and countries such as China and India still don't consume all that much beer yet.
I would like to see a higher return on capital, but I think that'll come along as the company leverages its acquisitions and boosts its margins. And though these are famous last words, I don't see how the U.S. business gets much worse for the company, so that, too, could be a source of better performance in the future. In the meantime, I think the valuation on these shares is very interesting, and I'd suggest that Fools with a global yen for profits take a closer look.
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).
