Yahoo Finance Volatility 101: Should Anheuser-Busch InBev (EBR:ABI) Shares Have Dropped 42%?
The main aim of stock picking is to find the market-beating stocks. But even the best stock picker will only win with some selections. So we wouldn't blame long term Anheuser-Busch InBev SA/NV (EBR:ABI) shareholders for doubting their decision to hold, with the stock down 42% over a half decade. There was little comfort for shareholders in the last week as the price declined a further 2.4%.
Check out our latest analysis for Anheuser-Busch InBev
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
Looking back five years, both Anheuser-Busch InBev's share price and EPS declined; the latter at a rate of 3.0% per year. Readers should note that the share price has fallen faster than the EPS, at a rate of 10% per year, over the period. This implies that the market is more cautious about the business these days.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
We know that Anheuser-Busch InBev has improved its bottom line over the last three years, but what does the future have in store? Take a more thorough look at Anheuser-Busch InBev's financial health with this free report on its balance sheet.
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Anheuser-Busch InBev the TSR over the last 5 years was -35%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
Anheuser-Busch InBev shareholders gained a total return of 2.3% during the year. But that return falls short of the market. But at least that's still a gain! Over five years the TSR has been a reduction of 8.2% per year, over five years. It could well be that the business is stabilizing. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Anheuser-Busch InBev (of which 1 is a bit concerning!) you should know about.
We will like Anheuser-Busch InBev better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on BE exchanges.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
