Boston Beer has plenty of room to grow

The craft brewer makes up less than 1.5% of the US market, and analysts are bullish on the stock.

By Zacks.com Sep 30, 2013 4:05PM

Boston Beer Co.'s Samuel Adams Brewery in Boston, Mass. (© Scott Eisen/Bloomberg via Getty Image)By Eric Dutram

 

While giant brewers like Budweiser (BUD) and Molson Coors (TAP) still dominate the U.S. beer market, craft brewers have managed to carve out a decent-sized niche for themselves. And on a recent "fact-finding mission" that I took to the headquarters of Boston Beer Co. (SAM) in Massachusetts, I can see why many have embraced these smaller brewers.


Not only do companies like Boston Beer offer an arguably better beer, but you can tell that there is a great level of care put into the product as well. Many consumers have noticed the flavor -- or at least the uniqueness -- and have allowed Boston Beer to grow into the great position it finds itself in today.


Yet even with the solid level of growth that the company has seen so far, SAM makes up less than 1.5% of the total U.S. market, suggesting that Boston Beer clearly has plenty of room to grow. For this reason, and America's current obsession with craft beer, this brewer of Boston Lager could be worth a closer look.


SAM in Focus

The growth for Boston Beer can best be seen in the recent earnings estimate revision trends for the company. Analysts clearly like the craft beer story too, as not a single estimate has gone lower for Boston Beer in the past 60 days, while when zeroing in on the current year, three estimates have gone up.


The magnitude of the increases has also been impressive, with the current year surging from $5 a share 90 days ago to the current level at $5.36. Current quarter estimates have also jumped, suggesting that analysts are quite bullish on the company’s prospects.


But don't worry about SAM being able to live up to the hype, as the firm has a pretty solid track record at earnings time. It has beaten in three of the last four earnings release dates, while its Zacks ESP is positive, suggesting that it is well positioned to beat this quarter as well.


Thanks to these factors, SAM has earned itself a Zacks Rank #1 ("strong buy"), meaning that we are looking for some more outperformance in the weeks ahead. And considering how well Boston Beer did following the last earnings report, this should definitely be a stock on your radar.


Not all craft beer is equal

While Boston Beer is well positioned for further gains, it is important to remember that not all the stocks in the ‘beverages-alcoholic industry are as highly ranked. In fact, Boston Beer is actually the cream of the crop from the Zacks Rank perspective, as it is the only one that has a No. 1 rank.


Meanwhile, one of its top craft brew competitors, the Craft Brew Alliance (BREW), is one of just two stocks that has a Zacks Rank of 5 ("strong sell") in this industry. So, if you are looking for a beer play in the craft space, you should probably look to SAM over BREW for hopes of better performance in this in-focus industry.


BOSTON BEER INC (SAM): Free Stock Analysis Report (email required)
CRAFT BREW ALLN (BREW): Free Stock Analysis Report (email required)
 
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Tags: BUDSAMTAP
7Comments
Sep 30, 2013 7:51PM
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I'VE ALWAYS LIKED IMPORTS WHEN I WAS YOUNGER. NEVER LIKE BUD AND LIGHT AND

LIME? YUK! PLATINUM? GIVE ME A BREAK! MILLER LITE? YUK! COORS LITE? YUK! SAMUEL

ADAMS IMPERIAL ALE IS MY FAVORITE AMERICAN BEER AND THEN MC EWAN'S SCOTCH

ALE IMPORT! IT'S ALWAYS BEEN TASTE FOR ME. MOST MICRO BREW BEERS ARE REALLY

GOOD AND SO MUCH BETTER THAN BUD MILLER COORS HORSE PISS! I DON'T LIKE FRUIT

BEERS THAT ARE COMING OUT WHERE ALL YOU TASTE IS SWEET FRUITY TASTE! THAT

IS GIRLY BEER! I HOPE SAM ADAMS AND MICRO BREWED BEERS TAKE OVER THE MARKET!

I'M SICK OF THE BUD MILLER LITE COORS BEER COMMERCIALS THAT HAVE NOTHING 2 TO

WITH BEER AND JUST STUPID POOP STARS AND SHAPE OF THE BOTTLES AND NOT TASTE!

BULLDOG? TIMBERLADY? PUFFY? JAY Z? BUNCH OF NO TALENT THUG RAPPERS.

Sep 30, 2013 11:42PM
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It's a good beer, but overrated.

And why, for God's sake, do they insist on putting spices and junk in their beers?

Malt. hops and barley.  Anything else is for morons that don't like the taste of beer.

Sep 30, 2013 9:10PM
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 Is there not enough drunk morn democrats in Boston? How's that welfare for terrorist going?
Sep 30, 2013 7:48PM
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I can't remember the last time I invested in Boston Beer... No, really, the whole night is a blur. But, I don't think it's a wise investment either way. I woke up with no money, no beer, and a really ugly woman (have you ever been to Boston??? sheesh)
Sep 30, 2013 9:53PM
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If we're talking large craft brewers, I'll take a Sierra Nevada over a Sam Adams any morning, day, or night.
Sep 30, 2013 9:27PM
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Good luck Sam Adams, once the Democraps realize that getting "boozed up" is not good for politics you will be out of luck.

By the way, did you know that the first day Ted Kennedy was sober is the day after he died.

Get the Dems boozed up Sam, sorry but I prefer wine.
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