The Boston Beer Company (NYSE: SAM) is
America's largest microbrewer, producing more than twenty seasonal and year-round varieties of Samuel Adams brand craft-brewed beers at facilities in Cincinnati and Boston. The company moved to boost its capacity last summer, with the purchase of a Pennsylvania brewery from Diageo (NYSE: DEO). The new facility is expected to begin producing Samuel Adams beers in the third or fourth quarter of 2008. The company also makes and distributes Twisted Tea brand malt beverages and HardCore brand ciders. Products are distributed to retailers in the US, Canada, the Caribbean, Europe and the Pacific Rim. Anheuser-Busch (NYSE: BUD) is a major competitor.
The firm pleased investors last week, when it reported Q4 EPS of 46 cents and revenues of $92.2 million. Analysts had been looking for 35 cents and $88.9 million. Management also guided FY08 EPS to $1.70-$2.00, versus Street consensus of ($1.68).
The stock
popped into a bullish "pennant" consolidation pattern on the news. Prices frequently exit pennants moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the issue with one "strong buy", one "buy" and three "holds". Analysts see an 18% growth rate, through the next year. The SAM Price to Sales ratio (1.89), Price to Free Cash Flow ratio (22.92), Sales Growth rate (25.70%), EPS Growth rate (170.59%), Return on Assets (12.84%) and Return on Investment (17.89%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 53% of the outstanding shares. Over the past 52 weeks, the stock has traded between $31.00 and $55.30. A stop-loss of $39.50 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.
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