Financial Trading Blog
Stock of the day 11/05/2015 – SABMiller PLC
An erratic if overall strong 2014 saw SAB start the year at £30.87 before ringing in the New Year at £33.62. An early January low of £31.64 was quickly forgotten with the brewer reaching a high of £37.68 at the start of March. Things began to turn as the year went on, and since SAB released its fourth quarter update in the middle of April the company has been on somewhat of a losing streak, being in the red most of the previous fortnight. However, Thursday saw rumours of a £50-a-share bid from ABI, Warren Buffet & 3G Capital push the stock higher to trade near £35.05.
(Source: IT-Finance.com 07/05/2015)
Despite posting a 6% top line improvement for the fourth quarter, fuelled by a 12% increase in African sales and a 7% increase in Latin American revenue, analysts are still expecting SABMiller to report an overall 7% decline in its full year bottom line. Gradual growth of its premium beer sales in China and those impressive gains in Africa and Latin America are failing to full compensate for a slowdown in alcoholic beverage buying in pre-developed areas. For example, Europe only saw a 2% increase in revenue, with Peroni sales in the UK and growth in the eastern part of the continent being the standouts.
However, things are expected to pick up from 2016 onwards, meaning SAB hasn’t seen the kind of investor disappearance that could have occurred with its weak bottom line forecasts. With full year group revenue up 4%, analysts are expecting pre-tax profits of £3.29 billion with £0.694 in earnings per share. Considering the signs of slowdown in the West, and a warning from the company itself about the harmful effects of a stronger dollar, analysts have given SABMiller a consensus rating of ‘hold’ with an average target price of £37.12.
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