The dominant question for SABMiller (OTCPK:SBMRY) and the shareholders of this large brewer remains that of whether or not Anheuser-Busch Inbev (NYSE:BUD) will bid for the company
to create a global titan in beer. Although I can understand some of the
appeal of such a deal (very complementary market exposures and
compelling operating scale), I think there are so many obstacles in the
way of a deal that it is no better than a "maybe" at this point.
Can
SABMiller do well enough on its own merits to justify buying or holding
the shares today? The best I can say is "maybe", as my base-case
expectations for long-term volume and revenue growth and margin
improvement suggest the shares aren't very cheap today. Then again,
global staples often maintain higher multiples than would otherwise seem
fair and SABMiller still has significant opportunities to drive higher
margins and returns on capital and the company does have that attractive
kicker of heavy leverage to emerging markets with below-average current
consumption patterns.
Read the full article here:
SABMiller Can Still Sell A Self-Improvement Story
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