ABEV

We rate AMBEV S.A. (ABEV) as a Buy with a composite score of 73.4/100 at a current price of $3.21. The stock scores above average across the majority of our six quantitative factors and ranks #29 out of 7,333 stocks in our universe, reflecting a favorable risk-reward profile.

The rating is primarily driven by strength in value (97th percentile) and stability (92th percentile), which together account for the majority of the composite score. All factors score above the 40th percentile, indicating no material weakness in the quantitative profile. We assign a Narrow Moat rating (56/100), Low uncertainty, and Exemplary capital allocation.

Key items to watch: whether strong momentum is fundamentally supported by revenue trends. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

AMBEV S.A. holds an above-average position (#15 of 50) within the Manufacturing sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 73.4/100 places it at rank #29 in our full 7,333-stock universe. With a $29.1B market capitalization, AMBEV S.A. operates at meaningful scale within the Manufacturing sector, providing competitive advantages in distribution, procurement, and customer reach.

Despite positive momentum (71th percentile), revenue contraction of -12% creates a divergence between price action and fundamental trajectory. This divergence suggests either that the market is looking through near-term weakness or that technical factors are temporarily inflating the stock. Investors should assess whether the revenue decline reflects cyclical weakness or structural challenges.

The margin cascade tells an important story: gross margins of 51% (+8.7pp vs sector) narrow to operating margins of 24% (+23.1pp vs sector) and net margins of 16.6%, yielding a gross-to-net conversion rate of 32%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $3.21, AMBEV S.A. appears undervalued relative to its fundamentals. Our value factor score of 97/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 21.1x (roughly in line with the sector median of 22.3x), EV/EBITDA of 2.3x (discounted to peers), P/B of 3.0x, P/S of 0.8x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Low uncertainty rating to AMBEV S.A.. The company exhibits strong financial stability with a beta of 0.31, conservative leverage (4% D/E), and a stability factor in the 92th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

Specific risk factors that inform our assessment include: low beta of 0.31 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 92th percentile and quality factor at the 90th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 51% provide a buffer against cost pressures; conservative leverage (4% D/E) limits balance sheet risk; above-average stability (92th percentile) suggests predictable business dynamics. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate AMBEV S.A.'s capital allocation as Exemplary. Management demonstrates a strong track record of balancing reinvestment with shareholder returns, evidenced by returns on equity of 60.2%, disciplined leverage (4% D/E), best-in-class net margins of 16.6%. Exemplary allocators typically generate returns on equity above 20% while maintaining debt-to-equity below 50% — AMBEV S.A. meets this high bar.

The balance sheet remains conservatively managed, providing financial flexibility for opportunistic investments while maintaining a margin of safety for shareholders. We note that the combination of 36.5% return on assets and controlled leverage suggests management is deploying capital at rates well above the cost of capital — the hallmark of exemplary stewardship.

In summary, AMBEV S.A. receives a Buy rating with a composite score of 73.4/100 (rank #29 of 7,333). Our quantitative framework assigns a Narrow Moat (56/100, trend: stable), Low uncertainty, and Exemplary capital allocation. The average factor score across quality, value, momentum, stability, and investment is 80/100.

Our analysis supports a constructive view on AMBEV S.A.. The combination of identifiable competitive advantages, low uncertainty, and exemplary capital allocation creates a risk-reward profile that favors accumulation at current levels. We recommend investors consider adding this name to portfolios aligned with the stock's risk profile.