Ambev S.A. American Depositary Shares (Each representing 1 Common Share) (ABEV)

FairStock Score: 68/100 — STEADY

Key Financials

Strengths

• Generates $12.5 billion in annual free cash flow (27.0% yield on market cap)
• Solid return on equity of 17.0% above cost of capital
• Conservative balance sheet with debt-to-equity of just 0.04, providing financial flexibility
• Attractive 9.2% dividend yield providing steady income returns
• Established organization with 39,000 employees providing operational scale

Concerns

• Revenue declining at 8.2% year-over-year signals potential demand weakness or market share loss
• Altman Z-Score of 0.8 places it in the financial distress zone—elevated bankruptcy risk

AI Analysis

Ambev S.A. American Depositary Shares (Each representing 1 Common Share) is a mid-cap consumer defensive company valued at $46.4 billion. The business generates $88.2 billion in annual revenue with a 4.9% net margin and $12.5 billion in free cash flow. From a quality standpoint, Ambev shows distressed Altman Z-Score of 0.8 warrants caution and adequate 17% ROE. On valuation, the stock is attractively valued at 14.7x earnings, with offers a 41% margin of safety vs Graham Number of $5. Growth dynamics show revenue growing at -8.2% and profit growth of -10.9%. The 9.2% dividend yield adds an income component for patient holders. Our composite FairStock Score of 67/100 reflects above-average fundamentals overall. This combination of reasonable valuation, solid returns, and conservative leverage makes it worth a closer look for value-oriented portfolios.

Bull Case

The market underappreciates Ambev's consistent 17% ROE at just 15x earnings—a re-rating toward sector peers could unlock 30-50% upside. With $12.5 billion in annual free cash flow (27.0% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

Macro headwinds or sector-specific disruption could pressure margins, particularly if competitive intensity increases in the consumer defensive space. Sluggish -8% growth in a large-cap company leaves the stock vulnerable to de-rating if the market rotates toward higher-growth opportunities.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer