Why Anheuser-Busch InBev Stock Crashed Today

Key Points

• Anheuser-Busch InBev reported declining volumes of beer shipped in Q2.

• Revenue still increased, and at least one version of earnings was up.

• GAAP profits fell far short of what the company calls its "underlying profit."

• 10 stocks we like better than Anheuser-Busch InBev/NV ›

Shares of Anheuser-Busch InBev (NYSE: BUD), the multinational beverages (specifically, beer) stock, tumbled 11.8% through 10:05 a.m. ET Thursday after the company reported declining volumes of beer shipped in the second quarter and weaker-than-expected revenue.

Analysts had forecast Anheuser-Busch would earn $0.95 per share on $15.3 billion in sales. Earnings edged out expectations at $0.98, but revenue was only $15 billion.

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Anheuser-Busch InBev Q2 earnings

Not all the news was bad. Anheuser-Busch InBev noted that actual revenue increased 3% year over year in Q2, and "normalized EBITDA" was up 6.5%, with EBITDA margins expanding to 35.3%. Reported revenue, however, was hurt by unfavorable currency exchange rates, meaning a weak U.S. dollar. That depressed real revenue growth to just 2.1%.

The company said its "underlying profit" grew 7.7% to $1.95 billion, and underlying earnings per share grew 8.7% as the company bought back stock in the quarter. At Anheuser-Busch InBev, "underlying profit" basically translates as non-GAAP (adjusted) earnings, however -- and investors are treating the numbers as such.

Anheuser-Busch doesn't make it easy to figure out what its actual earnings as calculated according to generally accepted accounting principles (GAAP) were, but according to data from S&P Global Market Intelligence, they were only $0.82 per share.

Is Anheuser-Busch InBev stock a buy?

And now you see why investors are upset. Whatever the "underlying" or "normalized EBITDA" numbers say, Anheuser-Busch InBev's actual profit for Q2 was 16% lower than the headline number.

Granted, the stock doesn't look too expensive at just over 18 times earnings. But analysts only see the stock growing earnings at 12.5% over the next five years -- and right now, earnings are heading in the opposite direction, not growing, but shrinking.

And with a trend like that, it's hard to call the stock a buy.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.