The master craft brewers at Boston Beer (NYSE: SAM ) will report second-quarter financial results March 11. Should we join 'em in a frosty pint or will their earnings be skunked?
What analysts say:
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Buy, sell, or waffle? Of the five analysts who cover the patriot brewer, three recommend you cut yourself off with a hold rating, while two say it's worthy of another one for the road and rate it a buy. The Motley Fool CAPS community offers a toast to Boston Beer, with a full five out of five stars.
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Revenue. Sales are expected to foam at a 21.2% rate, rising to $88.9 million. Of course, it's going up against easier numbers from last year.
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Earnings. Profits, meanwhile, are expected to double up at the bar, jumping to $0.35 a share.
What management says:
Rising costs for grains and materials have been eating into margins all year long, not only for the maker of Samuel Adams and Twisted Tea, but for Anheuser-Busch (NYSE: BUD ) and Molson Coors (NYSE: TAP ) , as well. While the outcome hasn't been finalized yet, Boston Beer also is facing the prospect of having federal regulators veto its treatment of shipments of Twisted Tea for 2006 and 2007, which would lead to taking additional charges between $3.9 million and $9.3 million. Yet the brewer is expecting greater volume shipments, and there is higher pricing that was instituted earlier in the year.
What management does:
The short supply of barley and hops (which give Samuel Adams its distinctive flavor) has led to large price increases. Product prices haven't gone up enough to shore up the difference, and that's probably a trend that will continue for the near future.
|
Margin
|
01/06
|
04/06
|
07/06
|
10/06
|
02/07
|
|
Gross
|
58.0%
|
57.6%
|
57.1%%
|
56.5%
|
54.9%
|
|
Operating
|
9.4%
|
9.8%
|
11.3%
|
11.4%
|
9.7%
|
|
Net
|
6.5%
|
6.4%
|
7.4%
|
6.7%
|
5.6%
|
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.
What Fools say:
Here's how Boston Beer stacks up against some of its peers and competitors on Motley Fool CAPS:
|
Company
|
Market Cap
(billions)
|
PE Ratio
|
CAPS Rating
|
|
Boston Beer
|
$0.494
|
27.6
|
*****
|
|
Anheuser-Busch
|
$33.0
|
16.3
|
****
|
|
Molson Coors
|
$9.3
|
18.8
|
****
|
|
Diageo (NYSE:DEO)
|
$52.6
|
17.0
|
*****
|
|
Brown-Forman (NYSE:BF-B)
|
$7.9
|
19.1
|
****
|
|
Tsingtao Brewery
|
$1.8
|
NA
|
*****
|
|
Heineken
|
$27.8
|
NA
|
****
|
Data from Motley Fool CAPS and Yahoo! Finance.
CAPS investor NDSuperman thinks his favorite suds maker is still a value, considering its product, price, and positioning.
Boston Beer can not make the product fast enough for demand. Recently bought a [Pennsylvania] brewery to begin production in third or fourth quarter of 2008. The brewery contracted production for BBC in the past, so product transition to the new site should not be difficult.
Great management, great employees, great product, and the largest brewer in the fastest growing beer segment (craft beer). Given the newly discounted price (35.80 on 02/25/08), it's hard to find something that I don't like about this company or this stock.
One Fool says:
To be categorized as a craft brewer, the Brewers Association requires beer to made by a brewery that has less than 25% ownership by a non-craft brewing company, has at least 50% of its volume in an all-malt beer, and manufactures fewer than 2 million barrels a year (one barrel is equivalent to 31 gallons). While it accounts for just 4% of all the beer made and 6% of sales, craft-brewed beer has been outpacing larger breweries handily. Volume was up 13% for the year and dollar sales were up 17%. In fact, the resurgence of beer's popularity -- and craft beers in particular -- was one of the reasons behind the stumbling of spirits distributor Brown-Forman last quarter.
Despite the drop in Boston Beer's price last November, it still remains the priciest brewer of the bunch. Considering the value represented in Bud's shares, and the possibility that it may merge with InBev, the world's largest brewer, I'd have to tap Anheuser-Busch's keg here, even if I'd rather drink a bottle of Sam Light.
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