AmBev (NYSE: ABEV) and Brown-Forman (NYSE:BF.B) are both large-cap consumer staples companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, analyst recommendations, earnings, risk, institutional ownership, profitability and dividends.

Dividends

AmBev pays an annual dividend of $0.15 per share and has a dividend yield of 2.6%. Brown-Forman pays an annual dividend of $0.63 per share and has a dividend yield of 1.1%. AmBev pays out 65.2% of its earnings in the form of a dividend. Brown-Forman pays out 45.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Profitability

This table compares AmBev and Brown-Forman’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AmBev 16.15% 24.66% 14.40%
Brown-Forman 18.15% 55.27% 16.02%

Risk & Volatility

AmBev has a beta of 0.61, indicating that its share price is 39% less volatile than the S&P 500. Comparatively, Brown-Forman has a beta of 0.86, indicating that its share price is 14% less volatile than the S&P 500.

Insider & Institutional Ownership

7.2% of AmBev shares are owned by institutional investors. Comparatively, 21.7% of Brown-Forman shares are owned by institutional investors. 10.1% of Brown-Forman shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares AmBev and Brown-Forman’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
AmBev $15.01 billion 6.07 $2.30 billion $0.23 25.22
Brown-Forman $3.86 billion 7.26 $669.00 million $1.38 42.22

AmBev has higher revenue and earnings than Brown-Forman. AmBev is trading at a lower price-to-earnings ratio than Brown-Forman, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings and price targets for AmBev and Brown-Forman, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AmBev 0 2 3 0 2.60
Brown-Forman 0 12 1 0 2.08

AmBev currently has a consensus price target of $7.83, suggesting a potential upside of 35.06%. Brown-Forman has a consensus price target of $47.22, suggesting a potential downside of 18.95%. Given AmBev’s stronger consensus rating and higher possible upside, analysts plainly believe AmBev is more favorable than Brown-Forman.

Summary

Brown-Forman beats AmBev on 10 of the 16 factors compared between the two stocks.

AmBev Company Profile

Ambev S.A., through its subsidiaries, produces, distributes, and sells beer, draft beer, carbonated soft drinks (CSD), other non-alcoholic beverages, malt, and food in the Americas. It operates through Latin America North, Latin America South, and Canada segments. The company offers beer primarily under the Skol, Brahma, Antarctic, Brahva, Brahva Gold, Extra, Budweiser, Bud Light, Stella Artois, Corona, Modelo Especial, Beck, Leffe, Hoegaarden, Presidente, Brahma Light, President Light, Bohemia, The One, Quilmes Clásica, Paceña, Taquiña, Huari, Becker, Báltica, Ouro Fino, Pilsen, Patricia, Labatt Blue, Alexander Keith's, Kokanee, Banks, and Deputy brands. It also provides CSD, bottled water, isotonic beverages, energy drinks, coconut water, powdered and natural juices, and ready-to-drink teas under the Guaraná Antarctica, Gatorade, H2OH!, Lipton Iced Tea, Fusion, Do Bem, Pepsi, Canada Dry, Squirt, Red Rock, Pepsi-Cola, Seven Up, and Frutee brands, as well as cereal bars. Ambev S.A. offers its products through a network of third-party distributors and a direct distribution system. The company was founded in 1885 and is headquartered in São Paulo, Brazil. Ambev S.A. is a subsidiary of Interbrew International B.V.

Brown-Forman Company Profile

Brown-Forman Corporation is a spirit and wine company. The Company manufactures, bottles, imports, exports, markets and sells a range of alcoholic beverages. The Company has a portfolio of approximately 40 spirit, wine and ready-to-drink cocktail (RTD) brands. Its principal brands include Jack Daniel’s Tennessee Whiskey, Jack Daniel’s RTDs, Jack Daniel’s Tennessee Honey, Gentleman Jack Rare Tennessee Whiskey, Jack Daniel’s Tennessee Fire, Jack Daniel’s Single Barrel Collection, Jack Daniel’s Sinatra Select, Jack Daniel’s Winter Jack, Jack Daniel’s No. 27 Gold Tennessee Whiskey, Finlandia Vodkas, Finlandia RTDs, Korbel California Brandy, Woodford Reserve Kentucky Bourbons, el Jimador Tequilas, el Jimador New Mix RTDs, Herradura Tequilas, Canadian Mist Canadian Whisky, Sonoma-Cutrer California Wines, Early Times Kentucky Whisky and Bourbon, Chambord Liqueur, Old Forester Kentucky Bourbon, Antiguo Tequila, Pepe Lopez Tequila, Santa Dose Cachaca and Collingwood Canadian Whisky.

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