AB InBev (BUD) Set to Top Earnings Estimates This Season

Anheuser-Busch InBev SA/NV (BUD), also known as AB InBev, will release its second-quarter 2014 financial results on Jul 31, 2014 before the market opens. In the prior quarter, earnings for this alcoholic-beverage giant were nearly 13.9% lower than the Zacks Consensus Estimate.

Why a Likely Positive Surprise?

Our proven model shows that AB InBev is likely to beat earnings this season because it has the right combination of key factors.

Positive Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +2.22%. This is a meaningful and leading indicator of a likely positive earnings surprise for this company.

Zacks #2 Rank (Buy): The stocks with Zacks Ranks of #1, 2 and 3 have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.

The combination of AB InBev's Zacks Rank #2 and +2.22% ESP makes us confident of an earnings beat.

What is Driving Better-than-Expected Earnings?

Being the world's largest alcoholic-beverage company, AB InBev's approach toward brand management allows each of its brands to develop further through rigorous marketing strategies, financial control and operating leverage. We believe that the strength of many of its brands and effective distribution might have triggered growth in the second quarter.

The company also looks attractive based on its opportunities in the emerging as well as developed markets. Opportunistic acquisitions and expansion of global operations have the potential to boost its top and bottom line.

Further, as AB InBev was the official partner of this year's greatest soccer event in Brazil, we assume that the company's sales for second quarter 2014 must have registered a tremendous year-over-year boost. Per the restrictive official sponsorship agreement between FIFA and AB InBev, the company's Budweiser and Brahma beer brands were the only ones to be sold at the World Cup stadiums this year.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows that they have the right combination of elements.

Kirby Corporation KEX has an Earnings ESP of +3.08% and a Zacks Rank #1 (Strong Buy).

Avis Budget Group, Inc. CAR has an Earnings ESP of +3.18% and a Zacks Rank #2.

Archer Daniels Midland Co. ADM has an Earnings ESP of +5.26% and a Zacks Rank #2.