Consumers are becoming more and more socially conscious, and want the goods and services they use to measure up. In truth, it doesn't take much. A simple action that costs a company very little or nothing at all can make a real difference in the mind of the consumer, and the company's bottom line.
When you think Boston Beer (NYSE: SAM), you might think great beer and a great business, but not necessarily social responsibility. That's about to change. So without further ado, let's have a look at the maker of Sam Adams, and analyze the company in terms of it's performance as a socially-conscious enterprise, as a business, and as an investment.
Brewing the American dream
When Jim Koch, founder and chairman of Boston Beer, first started the company is 1984, no one would give him a loan, no one would carry his product, and he had limited access to mentors and advice. As a direct result of that experience, in 2008, Boston Beer began a program to help small food, beverage, and hospitality entrepreneurs get the capital and financial know-how they need to get their businesses up and running: "Brewing the American Dream." Here's an overview of what the program provides:
- Access to capital: Boston Beer, in partnership with the country's leading nonprofit microlender, Accion, provides small loans to entrepreneurs for expansion, equipment, improvements, and repairs of their businesses.
- Access to business skills: Speed Coaching events, webinars, and business and financial literacy seminars give entrepreneurs access to advice on topics as wide-ranging as marketing, distribution, packaging, and accounting.
- Access to networks and business opportunities: Helps small businesses owners connect with customers, coaching, peer networks, and online educational resources.
Since it began, Brewing the American Dream has distributed over $1.5 million in capital, granted loans to over 130 small businesses, created or saved more than 1,000 jobs, and coached or mentored nearly 3,000 small-business owners. Now that's the kind of corporate social responsibility worth raising a glass to.
A great company at a fair price
CSR cred established, now let's look at a few basic metrics and see how Boston Beer measures up against its peers as a business and as an investment.
- In its most recent quarter, Boston Beer grew its revenue by a beer-barrel sized 23.5% year over year.
- Adult-beverage giant Anheuser-Busch InBev (NYSE: BUD) grew its revenue by a not-so-beer-barrel-sized 0.5% YOY.
- Molson Coors Brewing (NYSE: TAP) had a great quarter, with YOY revenue growth of 25.3%.
- YOY earnings growth for Boston Beer were even better than its revenue growth: 27.3%
- Anheuser Busch had a healthy quarter, as well, with YOY earnings growth of 15.6%.
- Molson Coors? Not so much, with YOY earnings growth of only 0.5%.
Cash-to-debt ratio: It's always good to see more cash than debt on the balance sheet, ideally at least 1.5 times more.
- With $62.8 million in cash and $628 thousand in debt, Boston Beer's C/D is a very rarely seen 100.
- With $3.8 billion in cash and $39.8 billion in debt, Anheuser Busch's C/D is the all-too-often seen 0.1.
- Finally, $586 million in cash and $4.7 billion in debt boosts Molson Coors C/D just barely ahead of Anheuser Busch's: 0.12.
With money as cheap as it is, too many companies are in debt up to their corner offices, and it's a dangerous position to be in. Because when things go wrong -- and they always do -- the bigger the war chest a company has, the better chance it has of coming through the other side intact. Kudos to Boston Beer, then, on this important metric.
Making money while making a difference
Molson Coors' P/E is 13, Bud's is 18, and Boston Beer's is 25. While 25 is higher than average for an American company, it's not radically so. And, as you can plainly see from its stellar performance on the metrics, you're getting a lot of company for the money. Which company would you rather own stock in?
In terms of corporate social responsibility, Boston Beer is really putting itself out there, and putting its money where its mouth. Thanks, Jim Koch, for remembering what it was like when you got started, and applying your own time, talent, and capital toward helping entrepreneurs get the help you never had. Oh, and thanks for running such a successful business, to boot. Cheers!
Always on the lookout for a great, socially-responsible investment? It's hard to beat Whole Foods Market, the organic grocery store that's booked investors more than 30 times their initial investment since its IPO. In this brand new premium report on the company, our Foolish analysts walk you through the key must-know items for every Whole Foods investor, including the axial opportunities and threats facing the company. We're also providing a full year of regular analyst updates to go with it, so get your copy today by simply clicking here.
Fool contributor John Grgurich owns no shares of any of the companies mentioned in this column. Follow John's dispatches from the bleeding edge of capitalism on Twitter @TMFGrgurich. The Motley Fool owns shares of Boston Beer. Motley Fool newsletter services have recommended buying shares of Boston Beer and Molson Coors Brewing. The Motley Fool has a page-turning disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.