Maybe your favorite team or stock didn't win the World Cup. Pre-tournament favorite Brazil didn't quite make it, either, but AmBev
The Labatt acquisition created a substantial amount of goodwill amortization each quarter, which makes EBITDA useful in gauging the company's true performance. That said, AmBev reported solid results. Converting every 0.46 Brazilian reals to one U.S. dollar, EBITDA rose 11.9% year over year to $730 million, revenues climbed 9% to $1.86 billion, and earnings per U.S. ADR (excluding goodwill amortization) increased 39.3% to $0.55 a share.
Beer Brazil's EBITDA margin rose to 46.8%, and the company's market share continued to dominate the market, growing to 68.8%. Unlike Anheuser-Busch
Obviously, quarterly results were driven by World Cup festivities. Still, with stars like Skol, Bramha, and Quinsa, which grew 21% year over year, investors shouldn't dismiss this company out of hand. AmBev is moderately leveraged, with about $3.1 billion in debt, but investors shouldn't worry. The company generated $348 million in free cash flow last quarter, more than enough to cover its interest payments. (Healthy EBITDA margins of near 40% will do that for you.)
I liked AmBev last quarter because of its strong market position, enviable margins, and what I thought was a reasonable (but not bargain-priced) valuation. Like fellow international play FEMSA
Raise a glass to further Foolishness:
- The Little Beverage Company That Could
- AmBev Knocks Back a Cold One
- Boston Beer: Love the Product, Not the Stock
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Fool contributor Stephen Ellis does not own shares in any companies mentioned. You can see his holdings for yourself . The Motley Fool has a frothy disclosure policy .