Anheuser-Busch Stock Rallies—Is the King of Beers Back?

Key Points

• BUD stock is bubbling higher after a double beat that included record full-year revenue in 2024.
• The company is generating that higher revenue on lower volume largely on the strength of its premium beer brands.
• Solid fundamentals, including a low historical valuation, an improving debt situation, and a rising dividend, make BUD an intriguing choice among consumer staples stocks.

Anheuser-Busch InBev NYSE: BUD stock moved sharply higher after its quarterly earnings report. The price action is building on the momentum that’s been in place since the beginning of the year. The rally is refreshing for long-term shareholders. But after a year-and-a-half of headwinds (some self-inflicted), is it time for investors to give the company back its title as the King of Beers? Or could jumping in now set them up for a hangover?

The Reason For Revenue Growth Lies Underneath the Headline Numbers

The highlights of the company’s report showed a double beat. That is, Anheuser-Busch beat analysts’ estimates for revenue and earnings per share (EPS). Fourth-quarter revenue of $14.84 billion was 2.5% higher on a year-over-year (YoY) basis. And for the entire year, revenue reached a record level of $59.8 billion. That just edged out the prior record of $59.4 billion set in the prior year.

But the real news lies just below the headline story. The company managed to increase revenue while overall volume was slightly lower. When a company like Anheuser-Busch reports higher revenue on lower volume, investors may immediately look for a bump in EPS. That would indicate the company has pricing power.

And for the full year 2024, Anheuser-Busch did post a 4% increase in EPS. However, the company said the discrepancy in revenue and volume came due to an increase in sales for its premium brands, most notably Corona, Michelob ULTRA, and Stella Artois.

That’s not to say that volume was down across the board. The company's flagship Budweiser brand posted a 50% YoY volume increase in Brazil.

Beer Continues to Buck a Broader Trend

There are two societal trends hurting alcohol sales. First, there are the GLP-1 weight-loss drugs. In addition to helping patients lose weight, these drugs are showing promise in reducing alcohol consumption and cravings. Second, many Gen-Z consumers are embracing alcohol alternatives that provide several of alcohol’s calming benefits without the calories and other unwanted side effects.

All of this has been a drag on alcohol stocks. While the downturn has been most noticeable in categories like liquor, beer companies haven’t been immune. Still, the company reported January 2025 data from IWSR Global Tool that shows beer continues to be the alcohol of choice for those who are still partaking, with 47.2% of the market. Anheuser-Busch's chief executive officer (CEO) remarked, “Beer is a passion point for consumers and a vibrant category globally.”

And when you include the Beyond Beer category, that percentage increases to 48.2%. That’s important because Anheuser-Busch is not ignoring the trend towards less alcohol. The company is increasing its footprint in the no-alcohol and beyond beer categories, which it sees as growing at 5x and 2x the overall beer category, respectively.

BUD's Fundamentals Align With Future Growth

Many investors are hearing about valuations, particularly as it applies to high-growth technology stocks. Consumer staples stocks like BUD generally trade at far lower valuations. Currently, Budweiser trades at a forward price-to-earnings (P/E) ratio of around 17x and a price-to-sales of 1.7. Both numbers are around 2020 levels. When investors look back at the five-year stock chart for BUD, they can see that this was the beginning of a significant uptrend in the company’s stock. Is a similar setup emerging?

BUD stock just broke above its 200-day simple moving average (SMA). This is generally seen as a bullish indicator, particularly when it’s accompanied by strong volume. The Anheuser-Busch analyst forecasts on MarketBeat have a consensus price of $64, which is about 5% below BUD stock’s 52-week high.

Investors looking to buy the stock may want to do so before May to capture the company’s annual dividend. In 2024, Anheuser-Busch raised its dividend by 42% from 62 cents per share to 81 cents per share.

As part of the company’s earnings report, management recommended a dividend of $1.00 per share, a 14% YoY increase. Investors should note that the company’s annual dividend payments make up less than 33% of its annual free cash flow (FCF). The company is in the process of paying off debt and has a $2 billion share buyback program in place.