Why Ambev (ABEV) Stock Is a 'Buy' at TheStreet

NEW YORK (TheStreet) -- TheStreet Ratings team reiterated its "buy" rating for Ambev (ABEV) Friday with a ratings score of B-.

Shares of Ambev were gaining 1.6% to $6.84.

About 19.6 million shares of Ambev were traded by 3:35 p.m., above the average trading volume of about 11.4 million shares a day.

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TheStreet Ratings team rates AMBEV SA as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate AMBEV SA (ABEV) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, notable return on equity, expanding profit margins and good cash flow from operations. 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 3.4%. Since the same quarter one year prior, revenues slightly increased by 3.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. 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 rather high; currently it is at 66.74%. 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 93.12% to $699.73 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 2.99%.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Beverages industry. The net income increased by 58.2% when compared to the same quarter one year prior, rising from $713.66 million to $1,129.23 million.
  • You can view the full analysis from the report here: ABEV Ratings Report

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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.

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