Head-To-Head Analysis: Ambev (NYSE:ABEV) versus Brown Forman (NYSE:BF.A)

Brown Forman (NYSE:BF.A) and Ambev (NYSE:ABEV) are both large-cap consumer staples companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, profitability, dividends, institutional ownership, valuation, analyst recommendations and risk.

Institutional and Insider Ownership

3.8% of Brown Forman shares are owned by institutional investors. Comparatively, 8.1% of Ambev shares are owned by institutional investors. 4.1% of Brown Forman shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Brown Forman and Ambev’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Brown Forman	18.20%	17.63%	8.78%
Ambev	17.69%	16.63%	10.65%

Dividends

Brown Forman pays an annual dividend of $0.92 per share and has a dividend yield of 3.4%. Ambev pays an annual dividend of $0.02 per share and has a dividend yield of 0.6%. Brown Forman pays out 60.1% of its earnings in the form of a dividend. Ambev pays out 10.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Risk and Volatility

Brown Forman has a beta of 0.33, indicating that its stock price is 67% less volatile than the S&P 500. Comparatively, Ambev has a beta of 0.64, indicating that its stock price is 36% less volatile than the S&P 500.

Earnings & Valuation

This table compares Brown Forman and Ambev”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Brown Forman	$3.93 billion	3.15	$715.00 million	$1.53	17.60
Ambev	$15.80 billion	3.08	$2.78 billion	$0.19	16.24

Ambev has higher revenue and earnings than Brown Forman. Ambev is trading at a lower price-to-earnings ratio than Brown Forman, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Brown Forman and Ambev, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Brown Forman	0	0	0	0	0.00
Ambev	1	6	0	0	1.86

Ambev has a consensus target price of $3.09, suggesting a potential upside of 0.27%. Given Ambev’s stronger consensus rating and higher probable upside, analysts clearly believe Ambev is more favorable than Brown Forman.

Summary

Ambev beats Brown Forman on 8 of the 15 factors compared between the two stocks.

About Brown Forman

Brown-Forman Corporation manufactures, bottles, imports, exports, markets, and sells various alcoholic beverages. It provides spirits, wines, whiskey spirits, whiskey-based flavored liqueurs, ready-to-drink and ready-to-pour products, ready-to-drink cocktails, vodkas, tequilas, champagnes, brandy, bourbons, and liqueurs. The company offers its products primarily under the Jack Daniel's, Woodford Reserve, Canadian Mist, GlenDronach, BenRiach, Glenglassaugh, Old Forester, Early Times, Slane Irish Whiskey, Coopers' Craft, el Jimador, Herradura, New Mix, Pepe Lopez, Antiguo, Finlandia, Korbel Champagne, and Sonoma-Cutrer brands. It is also involved in the sale of used barrels, bulk whiskey, and wine; and provision of contract bottling services. The company serves retail customers and consumers through distributors or state governments; and retailers, wholesalers, and provincial governments directly. It has operations in the United States, the United Kingdom, Germany, Australia, Mexico, and internationally. Brown-Forman Corporation was founded in 1870 and is headquartered in Louisville, Kentucky.

About Ambev

Ambev S.A., through its subsidiaries, engages in the production, distribution, and sale of beer, draft beer, carbonated soft drinks, malt and food, other alcoholic beverages, and non-alcoholic and non-carbonated products in Brazil, Central America and Caribbean, Latin America South, and Canada. It offers beer primarily under the Skol, Brahma, Antarctica, Brahva, Budweiser, Bud Light, Beck, Leffe, Hoegaarden, Balboa ICE, Balboa, Atlas Golden Light, Atlas, Bucanero, Cristal, Mayabe, Presidente, Presidente Light, Brahma Light, Bohemia, The One, Corona, Modelo Especial, Stella Artois, Quilmes Clásica, Paceña, Taquiña, Huari, Becker, Cusqueña, Michelob Ultra, Busch, Pilsen, Ouro Fino, Bud 66, Banks, Deputy, Patricia, Labatt Blue, Alexander Keith’s, and Kokanee brands. The company also provides carbonated soft drinks, bottled water, isotonic beverages, energy drinks, coconut water, powdered and natural juices, and ready-to-drink teas under the Guaraná Antarctica, Gatorade, H2OH!, Pepsi Black, Lipton Iced Tea, Fusion, Pepsi-Cola, Canada Dry, Squirt, Red Rock, Red Bull, Seven Up, Nutrl, Bud Light Seltzer, Palm Bay, and Mike’s brands. It offers its products through a network of third-party distributors and a direct distribution system. The company was founded in 1885 and is headquartered in São Paulo, Brazil. Ambev S.A. is a subsidiary of Interbrew International B.V.