Is It Time to Tap the World's Leading Brewer?

After stumbling through the recession, Anheuser-Busch InBev (NYSE: BUD) is back to the sober business of growing sales and volumes.

For the first quarter of 2010, the world's largest brewer and maker of such brands as Budweiser, Stella Artois, and Beck's posted revenue of $8.33 billion, coming in just shy of 2% growth.

Total volume grew 0.8%, with the company's Northern Latin America and China regions enjoying 13.7% and 5.1% gains, respectively. This is now the second consecutive quarter in which AB-Inbev has poured on year-over-year volume growth. Moreover, the most recent quarter's performance is modestly encouraging when compared to that of key competitors.

For instance, Heineken, which is now 20% owned by Latin America-based FEMSA (NYSE: FMX), saw Q1 beer volumes plummet more than 5% on an organic basis. And volume at MolsonCoors (NYSE: TAP) took a header to the tune of nearly 4%.

On the other hand, Latin American beer behemoth AmBev (NYSE: ABV) -- of which ABInBev is a majority owner -- increased organic volume by 9%. Meanwhile, craft beer specialist Boston Beer (NYSE: SAM), home to the Samuel Adams label, was simply awash in suds, with Q1 core shipment volume jumping 19%.

There are additional reasons to be cautious on ABInBev's prospects. Market share gains, for one, didn't appear to be as widespread as they were in Q409. And two, results in North America -- the company's largest market -- left investors in need of a stiff drink, as organic volume here declined a little more than 6%. By contrast, MillerCoors, a U.S.-focused joint venture of SABMiller (Pink Sheets: SBMRY.pk) and MolsonCoors (NYSE: TAP), reported a lesser Q1 volume decline of 3%. And nonalcoholic beverage maker Coca-Cola (NYSE: KO) also fared better, despite strong industry headwinds.

When it comes to profits, investors may also wonder whether to drink in celebration or sorrow. On a reported basis, earnings per share reached $0.30 -- a major decline from the $0.50 earned in the year-ago quarter. However, if we strip out one-time costs related to a favorable debt repayment and refinancing, EPS advances to $0.56, good enough for 12% growth. In terms of core business fundamentals, the adjusted figure is probably the best performance gauge.

Famed value investor Whitney Tilson thinks that AB-InBev shares can "double in the next couple years" -- even without the benefit of a strong consumer recovery. Certainly, the company has a big opportunity to build shareholder value as it cuts costs and repays debt.

Personally, I prefer companies that also come with strong, or clearly improving, business fundamentals. And you might have to serve up a few drinks to convince me that ABInBev solidly fits that profile.

But in a few more quarters, who knows?