High hopes were riding on AB InBev when it listed on the JSE amid great fanfare in October 2016. These have, however, proved to be very misplaced.From an opening trade of R1,938, the share price of the world’s largest brewer has slid by more than a third. In its reporting currency, US dollars, it has fallen by just on a quarter since hitting a record high in July 2016.AB InBev’s share price has been buffeted by strong headwinds driven by rising US bond yields and a less than inspiring earnings performance.In common with other consumer staples companies, analysts use discounted cash flow (DCF) as a key factor to value AB InBev. In a DCF model, future expected cash flows are discounted to obtain an estimated present value.DCF models are based on free cash flow, which is the net taxed amount available after all capital expenditure.The 10-year US treasury bond yield provides the benchmark at which future free cash flows are discounted. A rising bond yield will drive up discount rates an...

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