Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Boston Beer Co Inc Plunged in 2015

By Travis Hoium - Updated Jul 18, 2017 at 12:59PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

When a growth stock doesn't deliver growth it's a recipe for disaster.

What: Shares of craft beer maker Boston Beer Co Inc (SAM 0.26%) dropped in 2015 as the company lost a bit of its growth luster. According to S&P Capital IQ data, the stock dropped a whopping 30.3% last year.

So what: No company has been a pillar of the craft beer boom more than Boston Beer's Sam Adams brand. It didn't start the craft beer industry in the U.S., but it's been the most successful beer of its type. The brand has also driven the company's growth since it was founded. As a result, investors put a premium on Boston Beer stock, one that demanded growth to be justified.

That growth narrative took a blow at the beginning of last year. The stock dropped 10.3% the day fourth quarter 2014 results were announced, as growth fell short of expectations. The results never picked up after that.

SAM Revenue (Quarterly YoY Growth) Chart

SAM Revenue (Quarterly YoY Growth) data by YCharts

The principal reason Boston Beer's stock dropped in 2015 is because its P/E ratio fell from the 40s to the mid-20s. That's what happens when you go from a high growth stock to a single-digit growth stock.

Now what: While 2015 wasn't a good year, I don't see a lot of upside coming in 2016 either. There are no obvious growth drivers, and the craft beer business has brought in more competition than ever before. I don't see that helping Boston Beer's stock. And with a P/E ratio still in the mid-20s I don't see this as a value stock either. If Boston Beer has another bad year in 2015 I may be interested in jumping in, but for now it's still too expensive for my taste.

Travis Hoium has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Boston Beer. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

The Boston Beer Company, Inc. Stock Quote
The Boston Beer Company, Inc.
SAM
$379.16 (0.26%) $0.97

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
402%
 
S&P 500 Returns
129%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/17/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.