AB InBev falls in Brussels after quarterly sales miss estimates

Anheuser-Busch InBev shares dropped in early Brussels trading after the brewer’s third-quarter sales came in below expectations. For everyday investors, the move shows how a company can post growth and still get marked down when Wall Street expected more.

The stock fell 4% in opening trade in Brussels, according to MarketWatch. The move followed AB InBev’s report of a 2.1% increase in revenue for the third quarter, a result that MarketWatch said was short of sales estimates.

Revenue is the money a company brings in from selling its products before costs are taken out. A sales miss means that reported revenue landed below what analysts had expected, even if the company still grew from the prior period.

That distinction matters in earnings season. Share prices often react less to whether a number is positive in isolation and more to how it compares with the expectations already reflected in the stock. In AB InBev’s case, investors also had a mixed set of signals to process: sales disappointed, while earnings came in ahead of estimates, according to MarketWatch.

Buyback and forecast update

AB InBev also said its board approved a $2 billion share buyback, MarketWatch reported. A buyback is when a company uses cash to repurchase its own shares. Reducing the share count can increase earnings per share, a common profit measure, because the same total profit is spread across fewer shares.

The company also raised the low end of its EBITDA forecast for the year, according to MarketWatch. EBITDA stands for earnings before interest, taxes, depreciation and amortization. Investors use it as one way to look at operating performance before some financing, tax and accounting costs are included.

Raising the low end of guidance means management narrowed its expected range by improving the weaker end of the outlook. That can signal more confidence in the floor for the year’s results, though the company’s sales miss was still enough to pressure the stock at the open.

The report leaves investors with a familiar earnings-season tradeoff: AB InBev delivered revenue growth and better-than-expected earnings, while its top line still failed to clear expectations. The market’s early reaction in Brussels suggested the sales shortfall carried weight despite the buyback authorization and the improved lower end of the EBITDA outlook.

This story draws on original reporting from MarketWatch.