Shares of Ambev were falling -3.5% to $7.14 in afternoon trading.
More than 17.5 million shares of Ambev traded hands by 3:30 p.m., about the daily average trading volume of about 9.8 million.
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TheStreet Ratings team rates AMBEV SA as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate AMBEV SA (ABEV) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, expanding profit margins, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- ABEV's revenue growth has slightly outpaced the industry average of 2.9%. Since the same quarter one year prior, revenues slightly increased by 4.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Beverages industry and the overall market, AMBEV SA's return on equity exceeds that of both the industry average and the S&P 500.
- The gross profit margin for AMBEV SA is currently very high, coming in at 72.65%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 28.15% significantly outperformed against the industry average.
- Net operating cash flow has significantly increased by 93.11% to $699.72 million when compared to the same quarter last year. In addition, AMBEV SA has also vastly surpassed the industry average cash flow growth rate of -11.10%.
- ABEV's debt-to-equity ratio is very low at 0.07 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.82 is somewhat weak and could be cause for future problems.
- You can view the full analysis from the report here: ABEV Ratings Report
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.