Luckin Coffee (OTCMKTS:LKNCY) vs. Ambev (NYSE:ABEV) Critical Analysis

Ambev (NYSE:ABEV) and Luckin Coffee (OTCMKTS:LKNCY) are both consumer staples companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, risk, profitability, institutional ownership, dividends, earnings and analyst recommendations.

Profitability

This table compares Ambev and Luckin Coffee’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ambev	18.47%	17.48%	11.14%
Luckin Coffee	6.78%	24.91%	12.44%

Analyst Recommendations

This is a summary of current ratings for Ambev and Luckin Coffee, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ambev	2	3	1	0	1.83
Luckin Coffee	0	1	1	2	3.25

Ambev currently has a consensus target price of $3.13, indicating a potential downside of 2.57%. Luckin Coffee has a consensus target price of $46.87, indicating a potential upside of 42.89%. Given Luckin Coffee’s stronger consensus rating and higher probable upside, analysts clearly believe Luckin Coffee is more favorable than Ambev.

Risk and Volatility

Ambev has a beta of 0.58, meaning that its share price is 42% less volatile than the S&P 500. Comparatively, Luckin Coffee has a beta of -0.34, meaning that its share price is 134% less volatile than the S&P 500.

Earnings and Valuation

This table compares Ambev and Luckin Coffee”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ambev	$15.80 billion	3.21	$2.78 billion	$0.20	16.07
Luckin Coffee	$7.03 billion	1.34	$513.88 million	$1.68	19.52

Ambev has higher revenue and earnings than Luckin Coffee. Ambev is trading at a lower price-to-earnings ratio than Luckin Coffee, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

8.1% of Ambev shares are held by institutional investors. Comparatively, 0.5% of Luckin Coffee shares are held by institutional investors. 2.7% of Luckin Coffee shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

Luckin Coffee beats Ambev on 8 of the 14 factors compared between the two stocks.

About Ambev

Ambev S.A., through its subsidiaries, engages in the production, distribution, and sale of beer, draft beer, carbonated soft drinks, malt and food, other alcoholic beverages, and non-alcoholic and non-carbonated products in Brazil, Central America and Caribbean, Latin America South, and Canada. It offers beer primarily under the Skol, Brahma, Antarctica, Brahva, Budweiser, Bud Light, Beck, Leffe, Hoegaarden, Balboa ICE, Balboa, Atlas Golden Light, Atlas, Bucanero, Cristal, Mayabe, Presidente, Presidente Light, Brahma Light, Bohemia, The One, Corona, Modelo Especial, Stella Artois, Quilmes Clásica, Paceña, Taquiña, Huari, Becker, Cusqueña, Michelob Ultra, Busch, Pilsen, Ouro Fino, Bud 66, Banks, Deputy, Patricia, Labatt Blue, Alexander Keith’s, and Kokanee brands. The company also provides carbonated soft drinks, bottled water, isotonic beverages, energy drinks, coconut water, powdered and natural juices, and ready-to-drink teas under the Guaraná Antarctica, Gatorade, H2OH!, Pepsi Black, Lipton Iced Tea, Fusion, Pepsi-Cola, Canada Dry, Squirt, Red Rock, Red Bull, Seven Up, Nutrl, Bud Light Seltzer, Palm Bay, and Mike’s brands. It offers its products through a network of third-party distributors and a direct distribution system. The company was founded in 1885 and is headquartered in São Paulo, Brazil. Ambev S.A. is a subsidiary of Interbrew International B.V.

About Luckin Coffee

Luckin Coffee Inc. offers retail services of freshly brewed drinks, and pre-made food and beverage items in the People's Republic of China. It offers hot and iced freshly brewed coffee, such as Americano, Latte, Cappuccino, Macchiato, Flat White, and Mocha, as well as specialty coffee based on market and seasonal trends; coconut milk latte products; tea drinks; pre-made beverages; and pre-made food items, such as pastries, sandwiches, and snacks. In addition, the company offers Luckin Pop premium instant coffee and inspirational cups through mobile apps and e-commerce platforms. It operates pick-up stores, relax stores, and delivery kitchens under the Luckin brand, as well as Luckin mobile app, Weixin mini-program, and other third-party platforms for third-party payment channels. Further, the company offers technical and consultation services; and manufactures materials for products. Luckin Coffee Inc. was incorporated in 2017 and is headquartered in Xiamen, the People's Republic of China.