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Heineken N.V. (OTCQX:HEINY) may actually possess a value equal to its perceived worth.
RBC Capital Markets initially downgraded the company’s stock on Wednesday only to reverse its decision hours later and classify it as a Sector Perform, stating that previous comparisons to similar companies were inaccurate.
Originally, RBC Capital Markets analysts James Edwards Jones and Emma Letheren claimed that HEINY had overestimated its pricing power for multiple years and failed to adequately invest in the equity of its brands through sustained revenue.
These analysts argued that Heineken, as compared to Anheuser-Busch InBev (BUD) and Carlsberg (OTCPK:CABGY), generates a higher percentage of its sales from its premium product portfolio, yet spends significantly less on marketing and selling expenses as a proportion of sales.
However, Bloomberg reports indicate that the analysts later discovered that HEINY calculates marketing and selling expenses differently than its competitors.
Unlike its rivals, HEINY does not include personnel costs and depreciation expenses in its calculations, rendering the comparison invalid.
“Integrity is a non-negotiable aspect of my job,” stated Jones to Bloomberg. “Once I realized that the downgrade was based on an incorrect premise, I had no choice but to reverse it.”
The company’s shares experienced minimal fluctuations on Wednesday.
