BUD - Anheuser-Busch InBev

[Foreign Tuffett]

I've been sniffing around BUD (but more so TAP) of late. It's hard to understand how the largest brewer in the world trades at 10-11x EBITDA and Molson Coors trades at ~8x EBITDA and the rest of the consumer staples universe trades at multiples between 10-15x.

 

Sure, people can't go out to eat (and thus drink) as much, but even with the leverage on these companies, they still generate a ton of cash and will generate a ton of cash even in a bad recession.

 

It's an easy double from here if they can maintain at least flattish EBITDA and get valued like some other high-quality staples companies (which are facing their own secular issues in many cases).

 

As u mention, I think people are just really concerned about the leverage. Net debt to "normalized EBITDA" is 4.86x and their self-assessed "optimal capital structure" is ~2x