Ambev

ABEV

Market cap $33.7B

Investors interested in stocks from the Beverages - Alcohol sector have probably already heard of Ambev (ABEV) and Diageo (DEO). But which of these two stocks presents investors with the better value opportunity right now?

Ambev S.A. remains resilient amid inflation and shifting consumer trends, supported by a strong balance sheet and attractive valuation. ABEV benefits from Brazil's robust beer culture, improving labor market, and domestic focus, shielding it from currency risks and market saturation. Despite recent volume declines, ABEV maintains solid margins, high free cash flow, low debt, and a sustainable 7%+ dividend yield.

"The true investor

Ambev delivers a compelling 7% dividend yield, supported by strong operating cash flow, a net cash position, and low reinvestment needs, making it attractive for income-focused investors. Despite macro challenges, Ambev maintains outstanding margins, with a 30% EBITDA margin and 25% EBIT margin, reflecting pricing power, cost discipline, and product mix optimization. The stock is deeply undervalued, trading at 6x EV/EBITDA and 12x P/E FWD—well below peers and historical levels—offering meaningful re-rating potential as fundamentals remain solid.

ACIU, ABEV and ALX have been added to the Zacks Rank #5 (Strong Sell) List on August 6, 2025.

Ambev offers strong margins, robust cash flow, and a leading beer portfolio, yet trades at a discount, due to Brazil risk and currency headwinds. The company's minimum 40% dividend payout and high yield provide an attractive income stream and a safety net for investors willing to take the risk of investing in the region. Ambev is well-positioned for premiumization and non-alcoholic trends, with growth potential tied to Brazil's economic recovery and possible long-term rate cuts.

Ambev S.A. (NYSE:ABEV ) Q2 2025 Earnings Conference Call July 31, 2025 11:30 AM ET Company Participants Carlos Eduardo Klutzenschell Lisboa - Chief Executive Officer Guilherme Fleury de Figueiredo Ferraz Parolari - Chief Financial and Investor Relations, Member of Executive Board & Shared Services Officer Conference Call Participants Felipe Ucros Nunez - Scotiabank Global Banking and Markets, Research Division Henrique R. Brustolin - Banco Bradesco BBI S.A.

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

With U.S.–China trade tensions and Middle East unrest rocking global markets, Latin America's stock exchanges – especially Brazil's Bovespa and Mexico's IPC – are hitting record highs as investors seek lower‑correlation havens. Brazil and Mexico's markets are shining as havens from Trump's tariff threats and Middle East chaos.

Ambev's revenue grew 6.7% y/y with a slight increase in volume and a more profitable brand mix. Strategy aims to defend market share. Margins improved, with cost and SG&A control, however, further growth seems limited. Strong cash position (BRL 17.1 billion) sustains dividends and ensures operational solidity.