Anheuser Busch Inbev (NYSE: BUD) and Diageo (NYSE:DEO) are both large-cap consumer staples companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, profitability, dividends, valuation, analyst recommendations, institutional ownership and risk.
Anheuser Busch Inbev pays an annual dividend of $3.21 per share and has a dividend yield of 2.9%. Diageo pays an annual dividend of $3.43 per share and has a dividend yield of 2.6%. Anheuser Busch Inbev pays out 79.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Anheuser Busch Inbev has increased its dividend for 8 consecutive years and Diageo has increased its dividend for 6 consecutive years. Anheuser Busch Inbev is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Insider & Institutional Ownership
5.9% of Anheuser Busch Inbev shares are owned by institutional investors. Comparatively, 11.9% of Diageo shares are owned by institutional investors. 4.5% of Anheuser Busch Inbev shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Valuation & Earnings
This table compares Anheuser Busch Inbev and Diageo’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Anheuser Busch Inbev||$56.44 billion||3.31||$8.00 billion||$4.05||27.22|
|Diageo||$23.15 billion||3.59||$3.38 billion||N/A||N/A|
Anheuser Busch Inbev has higher revenue and earnings than Diageo.
Volatility and Risk
Anheuser Busch Inbev has a beta of 1.06, meaning that its share price is 6% more volatile than the S&P 500. Comparatively, Diageo has a beta of 0.73, meaning that its share price is 27% less volatile than the S&P 500.
This table compares Anheuser Busch Inbev and Diageo’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Anheuser Busch Inbev||14.17%||19.47%||6.40%|
This is a breakdown of current ratings and target prices for Anheuser Busch Inbev and Diageo, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Anheuser Busch Inbev||1||1||8||0||2.70|
Anheuser Busch Inbev presently has a consensus price target of $129.25, suggesting a potential upside of 17.25%. Diageo has a consensus price target of $154.00, suggesting a potential upside of 15.22%. Given Anheuser Busch Inbev’s stronger consensus rating and higher possible upside, research analysts clearly believe Anheuser Busch Inbev is more favorable than Diageo.
Anheuser Busch Inbev beats Diageo on 12 of the 15 factors compared between the two stocks.
Anheuser Busch Inbev Company Profile
Anheuser Busch Inbev NV (AB InBev) is a Belgium-based company engaged in the brewers industry. The Company owns a portfolio of over 200 beer brands. The Company’s brand portfolio includes global brands, such as Budweiser, Corona and Stella Artois; international brands, including Beck’s, Leffe and Hoegaarden, and local champions, such as Bud Light, Skol, Brahma, Antarctica, Quilmes, Victoria, Modelo Especial, Michelob Ultra, Harbin, Sedrin, Klinskoye, Sibirskaya Korona, Chernigivske, Cass and Jupiler. The Company’s soft drinks business consists of both own production and agreements with PepsiCo related to bottling and distribution arrangements between its various subsidiaries and PepsiCo. Ambev, which is a subsidiary of the Company, is a PepsiCo bottler. Brands that are distributed under these agreements are Pepsi, 7UP and Gatorade.
Diageo Company Profile
Diageo PLC is an alcoholic beverage company. The Company operates in various categories, including spirits and beer. Its geographic segments include North America; Europe, Russia and Turkey; Africa; Latin America and Caribbean, and Asia Pacific. Its principal products includes Scotch whisky, Gin, Vodka, Rum, Beer, Irish Cream Liqueur, Wine, Raki, Tequila, Canadian Whisky, American Whiskey, Progressive Adult Beverages, Cachaca, Brandy and Ready to Drink. The Company’s brands includes Johnnie Walker, Smirnoff, Captain Morgan, Baileys, Tanqueray and Guinness. It manages its operations from various locations, including the United Kingdom; Ireland; Italy; Turkey; the United States; Canada; Brazil; Mexico; Australia; Singapore; India; Nigeria; South Africa; East Africa, and Africa Regional Markets. It also produces a range of ready to drink products mainly in the United Kingdom, Italy, South Africa, Australia, the United States and Canada.
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