If you live in Pittsburgh or are traveling there during the NHL playoff series between the hometown team, the Penguins, and the Boston Bruins, you may not find certain kinds of beer.
Several bars announced that they will not serve beer from the Boston area. It could be called the Great Boston Beer Ban.
Will this slow the growth of Boston Beer Co Inc (NYSE:SAM), the number one Craft Brew Alliance Inc (NASDAQ:BREW) brewer in America? Nope. It actually might provide the firm with some free advertising.
Boston Beer Co Inc (NYSE:SAM) has been on a roll lately, especially since they announced great results late last year. Shares have appreciated 35% since then, in spite of a small slide in April when a slowdown in growth was reported.
The company has a lot going for it:
1. It has zero debt
2. It has been growing at double-digit rates the past 5 years
3. Is very innovative in its product offerings – it will soon put its signature Samuel Adams Boston Lager in a can for the first time
A possible negative is that the stock is relatively overvalued. The current P/E is 35
Is this brew for you?
A competitor to Boston Beer Co Inc (NYSE:SAM) in the space is the aptly named Craft Brew Alliance Inc (NASDAQ:BREW), a consortium of four unique breweries that produce brands such as Red Hook and Omission beer. None are located in the Boston area, although one is in nearby New Hampshire. The company is based in Portland, Oregon.
Although revenues are growing at a relatively brisk pace, earnings have not kept up. The company announced a loss of $0.09 per share in the last quarter. A positive is low debt and high margins, although not in the same category as Boston Beer Co Inc (NYSE:SAM). It might be better to wait to buy the stock when the company shows that it can resume making money.
Rocky Mountain beer blues
Another beer company reporting less than stellar results recently is Molson Coors Brewing Company (NYSE:TAP), maker of Coors, Coors Light and Molson’s. These beers are not brewed inside the Rt. 128 corridor of Boston. Therefore, I’m confident you’ll be able to find them in Pittsburgh during the playoff series.
Earnings have been declining as of late, including a big 35% drop over the last year. A few bright spots exist: annual revenue has risen 60%, and the P/E is reasonable at 23, more in line with the industry and overall market. However, it has a bit more debt than Boston Beer Co Inc (NYSE:SAM) and Craft Brew Alliance Inc (NASDAQ:BREW). The stock has lagged the overall market for awhile. I’d hold off on purchasing the shares.