HEINEKEN N V S/ADR

Key Points
The beer maker reported its second-quarter and first-half earnings today.
While organic revenue was up, volumes continued to decline.
Heineken is dealing with lower alcohol consumption among the younger generation.
Shares of premium beer maker Heineken (OTC: HEINY) fell on Monday, down 9% as of 1:32 p.m. ET.
Heineken reported second-quarter earnings this morning. On a net organic adjusted basis, revenue and profits improved. However, growth came from price increases, as volumes continued to decline. As such, the continued volumes disappointment caused a sell-off following a recent rally in the stock.
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A noisy quarter wasn't so bad, but still disappointed
On an IFS basis, in the first half, Heineken saw revenue decline 5% and operating profit decline 7.1%, but these headline figures were skewed by divestitures, as well as a negative currency impact, as the euro has strengthened. On a "BEIA" basis, adjusting for divestitures and currency, net revenue was up 2.1%, and operating income was up 7.4%.
Those numbers don't look so bad; however, the stock fell anyway, as it became apparent that pricing actions drove the growth, while volumes sold continued to decline. In the second quarter, beer volumes declined 0.4% year over year. While improved from the first quarter, it was still a year-over-year decrease, and apparently lower than analysts had hoped. Perhaps the composition of the growth also worried investors, as volumes actually grew in most geographies but declined 4.8% in Europe, the company's largest market, which makes up 34.8% of total volume.
Heineken is performing admirably in a hostile industry
The problem doesn't seem to be related to Heineken's execution or performance. Rather, the entire alcoholic spirits market appears to be growth-challenged. A Time magazine report from earlier this year noted that millennials and Generation Z are not consuming as much alcohol as older generations did. The share of adults under 35 who say they "ever" drink has declined from 72% to 62% over 20 years, according to a new Gallup poll.
Therefore, one should view any alcohol company as being growth-challenged for the foreseeable future. That doesn't mean there can't be successful investments in the space due to company-specific strategies, but investors should understand it may be a tougher road for outperformance.
After today's decline, Heineken does trade cheaply, at 14.5 times this year's earnings estimates with a 2.3% dividend yield.
Should you invest $1,000 in Heineken right now?
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Why Heineken Sank Today

Investors with an interest in Beverages - Alcohol stocks have likely encountered both Heineken NV (HEINY) and Brown-Forman B (BF.B). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Heineken NV and Brown-Forman B are both sporting a Zacks Rank of # 2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one piece of the puzzle for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
HEINY currently has a forward P/E ratio of 15.59, while BF.B has a forward P/E of 18.44. We also note that HEINY has a PEG ratio of 2.58. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. BF.B currently has a PEG ratio of 5.67.
Another notable valuation metric for HEINY is its P/B ratio of 2.03. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, BF.B has a P/B of 4.20.
Based on these metrics and many more, HEINY holds a Value grade of B, while BF.B has a Value grade of D.
Both HEINY and BF.B are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that HEINY is the superior value option right now.
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HEINY or BF.B: Which Is the Better Value Stock Right Now?

For Immediate Release
Chicago, IL – January 31, 2025 – Zacks Equity Research shares Virtu Financial VIRT as the Bull of the Day and Heineken HEINY as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Spotify Technology S.A. (SPOT), Broadridge Financial Solutions, Inc. BR and Coherent Corp. COHR.
Here is a synopsis of all five stocks:
The broad market has been rocking and rolling as of late. After the major risk event of the FOMC was on the books, investors have turned towards earnings. The good news is that there have been some fantastic reports coming from the Mag 7 stocks early on. It’s led to some huge returns for the riskiest of equities.
Amidst that backdrop, it can feel like any stock you pick is destined to skyrocket. But be careful, eventually what will matter is earnings. Stocks with the strongest earnings trends are in the best position to grow over the long-term. We find those stocks every day by leaning on the strength of the Zacks Rank. Stocks with the best Zacks Ranks have the most powerful earnings trends.
One such stock is today’s Bull of the Day, Virtu Financial. Virtu Financial operates as a financial services company in the United States, Asia Pacific, Canada, EMEA, Ireland, and internationally. The company operates through two segments, Market Making and Execution Services. Its product includes offerings in execution, liquidity sourcing, analytics and broker-neutral, capital markets, and multi-dealer platforms in workflow technology.
This company thrives when there is movement in financial markets. As a high-frequency trading firm, they love to see the volatility. It’s shown up in their earnings as well, and it’s a big reason why this is currently a Zacks Rank #1 (Strong Buy). Over the last sixty days, five analysts have increased their earnings estimates for the current year while three have followed suit for next year. The bullish moves have pushed up our Zacks Consensus Estimates for FY25 from $3.05 to $3.24 while next year’s number is up from $2.98 to $3.29.
The company is coming off a huge earnings beat with Q4 2024 EPS coming in at $1.14 versus expectations calling for just 86 cents. That 32% beat was the fourth consecutive quarterly beat for the company. A quick look at the Price, Consensus and Earnings Surprise Chart shows how earnings bottomed out at the start of 2024 and have skyrocketed since. The series of beats means that the company consistently under-promises and over-delivers. That’s what has delivered new all-time highs for the stock here to start 2025.
There have been some mega trends in the market that have been sort of interrupted here recently. Some stocks in downtrends have bounced mightily along with the broad market. Some of these stocks deserve the bounce while others may be experiencing some dead cat action. One way to sort out the good from the bad is by looking at the Zacks Rank. Stocks in the good graces of our Zacks Rank have strong earnings trends while those which are not have the weakest earnings trends.
Today’s Bear of the Day is Zacks Rank #5 (Strong Sell) Heineken. Heineken N.V. brews and sells beer and cider in the Americas, Europe, Africa, the Middle East, Eastern Europe, and the Asia Pacific. The company provides soft drinks and water. It offers its beers under the Heineken, Heineken Light, Orchard Thieves, Orchard Thieves Light, Birra Moretti, Coors, Murphy's and Beamish Stouts, Desperados, Tiger, Sol, and Foster's brand, as well as under regional and local brands.
The reason for the unfavorable rank is that several analysts on Wall Street have cut their earnings estimates. Over the last sixty days, three analysts have cut their estimates have dropped their numbers. The bearish moves have brought our Zacks Consensus Estimate for the current year down from $2.87 to $2.66 while next year’s number is off from $3.21 to $2.94.
Heineken is in the Beverages – Alcohol Peers industry which ranks in the Bottom 3% of our Zacks Industry Rank. There is one stock in that industry which is in the good graces of our Zacks Rank. That’s Zacks Rank #2 (Buy) Kirin (KNBWY). There are several Zacks Rank #3 (Hold) stocks including Molson Coors (TAP).
Additional content:
Should You Add Spotify to Your Portfolio Ahead of Earnings?
Spotify Technology S.A. is set to report its fourth-quarter 2024 results on Feb. 4, before the bell.
See Zacks Earnings Calendarto stay ahead of market-making news.
The Zacks Consensus Estimate for earnings in the to-be-reported quarter stands at $1.92 per share, indicating 592.3% year-over-year growth. The consensus mark for revenues is pegged at $4.35 billion, indicating year-over-year growth of 10%.
Two estimates for the to-be-reported quarter moved down over the past 30 days versus one upward revision. Over the same period, the Zacks Consensus Estimate for fourth-quarter 2024 earnings has decreased by 3%.
SPOT's earnings surprise history has not been impressive. Earnings lagged the Zacks Consensus Estimate in two of the four trailing quarters and surpassed twice, the average negative surprise being 74.4%.
Earnings Whispers
Our proven model doesn't conclusively predict an earnings beat for Spotify this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that's not the case here. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Spotify has an Earnings ESP of -16.45% and a Zacks Rank #3. You can see the complete list of today's Zacks #1 Rank stocks here.
Factors Shaping Upcoming Results
The growth of subscribers and monthly active users (MAU) is likely to have benefited the top line in the to-be-reported quarter, directly benefiting the bottom line as well.
The consensus estimate for total MAUs is pegged at 665.3 million, indicating year-over-year growth of 10.5%. The consensus estimate for total ad-supported MAUs stands at 420.2 million, indicating year-over-year growth of 11%. The consensus mark for premium subscribers stands at 260 billion, indicating year-over-year growth of 10%.
Price Dynamics
SPOT has rallied a massive 150% over the past year, 57% over the past six months and 20.4% in the past month. These price dynamics suggest that the stock is in a rally phase.
Conclusion
While SPOT's current growth prospects appear robust, potential investors should consider waiting as the stock may undergo a correction, especially when it does not seem poised for an earnings beat. SPOT's long-term growth potential remains strong, making it a compelling stock to watch for the right investment opportunity.
Stocks That Warrant a Look
Here are a few stocks from the broader Business Services sector, which, according to our model, have the right combination of elements to beat on earnings this season.
Broadridge Financial Solutions, Inc.: The Zacks Consensus Estimate for the company's fourth-quarter 2024 revenues is pegged at $1.5 billion, indicating 9.8% year-over-year growth. The consensus mark for earnings stands at $1.4, suggesting 51.1% growth from the year-ago reported quarter. Earnings have surpassed the Zacks Consensus Estimate in two of the trailing four quarters and met in the other two, with an average earnings surprise of 1.3%.
BR has an Earnings ESP of +7.72% and a Zacks Rank of 2 at present. The company is scheduled to post its fourth-quarter results on Jan. 31.
Coherent Corp.: The Zacks Consensus Estimate for the company's second-quarter fiscal 2025 revenues is pegged at $1.4 billion, indicating a year-over-year increase of 21.6%. For earnings, the consensus mark is pegged at 70 cents per share, suggesting 94.4% growth from that reported in the year-ago quarter. The company beat the Zacks Consensus Estimate in all the past four quarters, with an average surprise of 25.5%.
COHR has an Earnings ESP of +7.48% and a Zacks Rank #2 at present. The company is scheduled to declare its fourth-quarter results on Feb. 5.
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Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
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Broadridge Financial Solutions, Inc. (BR) : Free Stock Analysis Report
Coherent Corp. (COHR) : Free Stock Analysis Report
Heineken NV (HEINY) : Free Stock Analysis Report
Virtu Financial, Inc. (VIRT) : Free Stock Analysis Report
Spotify Technology (SPOT) : Free Stock Analysis Report
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Virtu Financial and Heineken have been highlighted as Zacks Bull and Bear of the Day

There will be a first at the upcoming Summer Olympic Games in Paris. For the first time ever, there will be a beer sponsor at the Olympics.
Anheuser-Busch Inbev SA/NV (BUD) - the world’s largest brewer - agreed to become a sponsor of the Olympic Games. It will partner with the International Olympic Committee (IOC) for events through 2028.
However, there is a twist. The global beer sponsor of the Games will be Corona Cero, AB InBev’s zero-alcohol brew from Mexico.
Currently, that specific beer is not sold in the U.S. So instead, the Michelob Ultra light beer brand will be the focus of Olympic-related sponsorships in the U.S. There is a Corona Non-Alcoholic sold in the U.S., but that brand is owned by Constellation Brands (STZ).
The key takeaway here is that Budweiser has chosen to advertise to billions of sports fans a zero-alcohol product that only launched in Europe two years ago.
The New Generation of Beer Drinkers
AB InBev hopes to use the Paris Games to improve its position in the only part of the global beer industry that’s currently growing. This move makes sense.
The global zero-alcohol beer market is already worth $13 billion, and rising quickly.
That’s why the major brewers, such as the world’s second-biggest brewer, Heineken (HEINY), see big dollar signs as a growing number of health-conscious consumers - many of them younger - choose to avoid alcohol.
Michel Doukeris, the CEO of AB InBev, put it quite simply: “The consumer has changed.”
No-alcohol beer, or beer with alcohol content under 0.5%, currently has just a tiny share of the global beer market. Its 31.4 million hectoliters a year is dwarfed by the 1.93 billion hectoliters of alcoholic beer, according to GlobalData Plc. One hectoliter equals 26.4172 gallons.
But crucially, this tiny niche of the market has notched a compound annual growth rate of 3.6% since 2018, versus a mere 0.3% for alcoholic beer.
Those are numbers no brewer can ignore.
No-Alcohol Beer and Sports
Expect to see more advertising at major sporting events, like the Olympics, from the makers of no-alcohol or low-alcohol beer.
In 2023, Heineken aired the first-ever nationally televised advertisement for non-alcoholic beer during the Super Bowl.
In addition, we have seen Heineken 0.0 advertising with Formula 1 races, and Diageo PLC’s (DEO) Guinness 0.0 ads at the Six Nations rugby tournament.
And last year, Carlsberg A/S (CABGY) handed out 400,000 cans of French no-alcohol beer Tourtel Twist at the Tour de France cycling race. Currently, despite BUD’s Olympic deal, Carlsberg says Tourtel Twist is the non-alcoholic beer of choice at the Paris Games.
Invest in the Current Market Leader
With millennial and Gen Z demographic groups looking to temper their alcohol intake, the big brewers rightly think it’s better to have a viable alternative, rather than having such a large group
of consumers turning to a rival brand, or to alternatives like soda and water.
According to the data analytics and consulting firm, GlobalData Plc, the market leader in the no-alcohol beer market globally is Heineken 0.0. Other big sellers are Suntory All-Free from Japan’s Suntory Beverage & Food (STBFY), and Brahma 0.0%, which is owned by AB InBev.
I believe that Heineken will retain its market leadership position in this market. Heineken 0.0 has been a blockbuster success in many markets globally, and should remain a margin driver for several years to come.
Its larger rival, AB InBev, is lagging behind and says it will miss its target of 20% of sales from low or no-alcohol beer by 2025.
Amsterdam-based Heineken was among the first major global brewers to introduce non-alcoholic beer products. Heineken 0.0 first launched in a select few European markets in 2017, and now is available across 110 markets.
You may wonder how Heineken makes its zero-alcohol beer. Here’s the short version: it is made with water, barley malt, hop extracts and yeast — the same ingredients used for regular Heineken. The alcohol is then removed using vacuum distillation. Then, natural flavorings and aromas are blended back in to make the taste more closely resemble the original.
Alison Payne, Heineken’s global marketing director of zero alcohol beverages, is certainly an innovator. For example, Heineken’s 0.0 category now offers flavored beers, rivaling other firms’ flavored carbonated drinks in many markets.
Payne also sees opportunities in areas like 0.0 beer cocktails - a sort of ready-to-drink cocktail.
In the company’s 2023 earnings report, Heineken showed double-digit growth for non-alcoholic beer and cider in a number of markets.
Overall, Heineken reported strong performance in its first-quarter trading update. Organic growth in beer volume was up 4.7% across all regions and organic revenue was up by 9.4%. Pricing played a big role, with a 6.0% increase in price/mix on a consistent geographical basis. In the Americas, Heineken's 6.5% organic growth was primarily fueled by Brazil and Mexico.
These results were above the company’s estimates. The stock price did little to react because, despite the solid results, management maintained its conservative outlook for 2024, with operating profit growth in low- to high single digits.
Being the leader in the only growth area of the brewing industry makes HEINY stock a buy. It can be bought below $53.
On the date of publication, Tony Daltorio did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.