Given concerns over the valuation of the US market after the latest blow-off rally in a small cohort of technology stocks, global investors are starting to look for international value stocks which have resilient earnings but look underrated compared to their sector peers.

Dutch brewing group Heineken (HEIA:AMS) is an obvious candidate, especially with summer set to drive a pick-up in volumes and a heatwave in southern Europe and parts of the US and China likely to drive further demand.

While Heineken is far from being a luxury goods firm, its brands – which include Amstel, Heineken, Moretti, Sol and Tiger – are internationally renowned and tend to sit towards the premium end of the market.

Heineken is the world’s most valuable and most-trusted beer brand, but the parent company also owns dozens of craft beer and cider products which are also well-loved, with cider being one of its fastest-growing categories.

The group reports first-half earnings at the end of this month and the analyst consensus forecast expects volume sales and operating profits to be down by mid-single-digits due to weakness in one or two emerging markets and a tough comparison in Europe versus the same period last year.

However, because its brands are at the premium end, the firm has been able to raise prices in the on-trade (pubs, bars and restaurants) while input costs such as energy, packaging and transport are starting to fall.

Using Refinitiv data going back to 1992, Shares estimates the company has steadily grown its earnings per share by an average of 8.7% per year which is significantly faster than rivals such as Carlsberg (CARL-B:CPH) and even ahead of UK premium spirits-maker Diageo (DGE).

While the forced closure of pubs and bars during the pandemic had a dramatic effect on its business, Heineken still turned a profit and earnings have rebounded strongly since bottoming in the first quarter of 2021.

At their current price the shares are the cheapest they have been in over a decade on a cyclically adjusted price to earnings or CAPE basis, making this a great entry point.

Interestingly, analysts have started to turn positive on the stock of late with Bank of America raising its earnings forecasts last month and Goldman Sachs upgrading its recommendation last week from ‘hold’ to ‘buy’ for the first time in three years on the basis the shares are discounting lower volumes and a weak full year, meaning a positive surprise later this month could spark a major rerating.

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