Over the past six months, Anheuser-Busch has been a great trade. While the S&P 500 was flat, the stock price has climbed by 34.4% to $70.40 per share. This run-up might have investors contemplating their next move.
Is there a buying opportunity in Anheuser-Busch, or does it present a risk to your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free.
Why Is Anheuser-Busch Not Exciting?
Despite the momentum, we're swiping left on Anheuser-Busch for now. Here are three reasons why BUD doesn't excite us and a stock we'd rather own.
1. Long-Term Revenue Growth Disappoints
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Regrettably, Anheuser-Busch’s sales grew at a sluggish 2.1% compounded annual growth rate over the last three years. This was below our standards. 
2. Demand Slipping as Sales Volumes Decline
Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there’s a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive.
Anheuser-Busch’s average quarterly sales volumes have shrunk by 1.9% over the last two years. This decrease isn’t ideal because the quantity demanded for consumer staples products is typically stable. 
3. Slow Organic Growth Suggests Waning Demand In Core Business
When analyzing revenue growth, we care most about organic revenue growth. This metric captures a business’s performance excluding one-time events such as mergers, acquisitions, and divestitures as well as foreign currency fluctuations.
The demand for Anheuser-Busch’s products has generally risen over the last two years but lagged behind the broader sector. On average, the company’s organic sales have grown by 2.7% year on year. 
Final Judgment
Anheuser-Busch isn’t a terrible business, but it isn’t one of our picks. With its shares topping the market in recent months, the stock trades at 8.4× forward EV-to-EBITDA (or $70.40 per share). Investors with a higher risk tolerance might like the company, but we don’t really see a big opportunity at the moment. We're fairly confident there are better investments elsewhere. Let us point you toward one of our all-time favorite software stocks.
Stocks We Would Buy Instead of Anheuser-Busch
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