1. Healthcare

February 1, 2015
NYSE: SAM
BOSTON BEER INC
BUY
A+
A
A-
HOLD
B+
B
Annual Dividend Rate
NA
B-
C+
C
Annual Dividend Yield
NA
SELL
C-
D+
D
D-
Beta
0.59
SAM BUSINESS DESCRIPTION
The Boston Beer Company, Inc. produces and sells
alcohol beverages primarily in the United States,
Canada, Europe, Israel, the Caribbean, the Pacific
Rim, Mexico, and Central and South America.
E
E-
BUY
F
Market Capitalization
$3.0 Billion
Sector: Consumer Non-Discretionary
Weekly Price: (US$)
E+
52-Week Range
$202.78-$325.00
Sub-Industry: Brewers
SMA (50)
RATING SINCE
TARGET PRICE
08/06/2009
$367.68
Price as of 1/29/2015
$318.34
Source: S&P
SMA (100)
1 Year
2 Years
400
TARGET
TARGET
TARGETPRICE
PRICE
PRICE$367.68
$367.68
$367.68
TARGET
350
300
STOCK PERFORMANCE (%)
3 Mo.
Price Change
38.71
1 Yr.
51.56
250
3 Yr (Ann)
46.73
200
GROWTH (%)
Last Qtr
24.63
47.65
47.61
Revenues
Net Income
EPS
RETURN ON EQUITY (%)
SAM
Q3 2014
21.76
Q3 2013
24.58
Q3 2012
26.20
12 Mo.
29.69
29.71
29.80
3 Yr CAGR
22.31
14.09
15.02
150
100
Rating History
BUY
Ind Avg
13.37
14.52
13.03
S&P 500
14.59
13.97
13.23
Volume in Millions
2
1
2013
2014
2015
0
COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History
P/E COMPARISON
RECOMMENDATION
We rate BOSTON BEER INC (SAM) a BUY. This is based on the convergence of positive investment measures,
which should help this stock outperform the majority of stocks that we rate. The company's strengths can be
seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth,
compelling growth in net income, good cash flow from operations and expanding profit margins. We feel
these strengths outweigh the fact that the company is trading at a premium valuation based on our review of
its current price compared to such things as earnings and book value.
48.09
23.88
19.08
SAM
Ind Avg
S&P 500
2012
2013
Q3 2.79
Q1 0.62
BOSTON BEER INC has improved earnings per share by 47.6% in the most recent quarter compared to the
same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth
over the past two years. We feel that this trend should continue. During the past fiscal year, BOSTON BEER
INC increased its bottom line by earning $5.18 versus $4.40 in the prior year. This year, the market expects an
improvement in earnings ($6.60 versus $5.18).
Q2 1.88
Q4 1.33
Q3 1.89
Q1 0.51
Q2 1.45
Q4 1.25
Q3 1.53
Q1 0.56
Q2 1.06
EPS ANALYSIS¹ ($)
HIGHLIGHTS
The revenue growth came in higher than the industry average of 0.9%. Since the same quarter one year prior,
revenues rose by 24.6%. Growth in the company's revenue appears to have helped boost the earnings per
share.
2014
NA = not available NM = not meaningful
1 Compustat fiscal year convention is used for all fundamental
data items.
The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500
and the Beverages industry. The net income increased by 47.6% when compared to the same quarter one
year prior, rising from $25.69 million to $37.93 million.
Net operating cash flow has increased to $64.24 million or 31.40% when compared to the same quarter last
year. The firm also exceeded the industry average cash flow growth rate of 1.35%.
The gross profit margin for BOSTON BEER INC is rather high; currently it is at 56.57%. It has increased from
the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit
margin of 14.06% trails the industry average.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 1, 2015
PAGE 1
February 1, 2015
NYSE: SAM
BOSTON BEER INC
Sector: Consumer Non-Discretionary Brewers Source: S&P
Annual Dividend Rate
NA
Annual Dividend Yield
NA
PEER GROUP ANALYSIS
70%
THST
V
FA
AB
OR
LE
LE
AB
-10%
R
VO
FA
Revenue Growth (TTM)
UN
BF.A
BF.B
CCU
40%
EBITDA Margin (TTM)
Companies with higher EBITDA margins and
revenue growth rates are outperforming companies
with lower EBITDA margins and revenue growth
rates. Companies for this scatter plot have a market
capitalization between $237.7 Million and $198.6
Billion. Companies with NA or NM values do not
appear.
*EBITDA – Earnings Before Interest, Taxes, Depreciation and
Amortization.
70%
THST
V
FA
AB
OR
LE
SAM
R
VO
FA
LE
AB
-10%
UN
Revenue Growth (TTM)
Health and convenience remain major challenges and play a significant role in shaping product strategies.
Beverages have been in the spotlight over the last five years because of research that links ingredients, such
as sugars and acids, with prevalent chronic diseases, such as obesity, diabetes, and dental decay. Rising
environmental concerns also present a challenge. The production, distribution, and sale of beverages in the
United States are subject to the Federal Food, Drug, and Cosmetic Act, the Dietary Supplement Health and
Education Act of 1994, and the Occupational Safety and Health Act. These acts, various environmental
statutes, and numerous other federal, state, and local statutes are applicable to the production,
transportation, sale, safety, advertisement, and ingredients. Industry fragmentation also poses a major threat.
To overcome this, companies are acquiring smaller players or developing independent plants. Coca-Cola’s
Monster distribution will help bottlers realize economies of scale in their direct store distribution system.
PEER GROUP: Beverages
REVENUE GROWTH AND EARNINGS YIELD
-6%
Price as of 1/29/2015
$318.34
Faced with limited volume growth in developed markets, high-growth developing markets are increasingly
important to the bottom line. Mergers, acquisitions, and partnerships are on the rise as food and drink brands
look to establish or expand their presence in international markets. PepsiCo and Pepsi Bottling Group Inc.
acquired a 75% stake in Russia’s Lebedyansky JSC for around $2.0 billion in March 2008 and Coca-Cola bid
$2.3 billion for China Huiyuan Juice Group Ltd. in September 2008.
BREW
0%
52-Week Range
$202.78-$325.00
The non-alcoholic beverage segment represents 60% of the market. Premium wineries revenue has
registered annual growth of 8% over recent years and energy drink volume continues to surge.
SAM
TAP.A
TAP
Market Capitalization
$3.0 Billion
INDUSTRY ANALYSIS
The US beverage industry is broadly divided into alcoholic and non-alcoholic segments. The alcoholic
segment includes beer, wine, and spirits. The non-alcoholic segment includes carbonated soft drinks (CSDs),
fruit beverages, bottled water, milk, sports drinks, energy drinks, ready-to-drink (RTD) tea, and RTD coffee.
The industry has around 4000 manufactures and distributors generating upwards of $140 billion in annual
revenue. The industry is highly competitive on pricing, packaging, marketing, and developing new products.
The two biggest players are Coca-Cola (KO) and PepsiCo (PEP), which together hold more than 50% of the
market.
REVENUE GROWTH AND EBITDA MARGIN*
PEP
Beta
0.59
BUD
BREW
BF.A BF.B
TAP
TAP.A PEP
8%
ABEV CCU
Ticker
SAM
CCU
BREW
BUD
BF.A
BF.B
PEP
THST
TAP.A
TAP
ABEV
Recent
Company Name
Price ($)
BOSTON BEER INC
318.34
COMPANIA CERVECERIAS UNIDAS 19.09
CRAFT BREW ALLIANCE INC
12.46
ANHEUSER-BUSCH INBEV
123.47
BROWN-FORMAN
91.00
BROWN-FORMAN
90.44
PEPSICO INC
96.03
TRUETT-HURST INC
3.50
MOLSON COORS BREWING CO
82.38
MOLSON COORS BREWING CO
78.03
AMBEV SA
6.81
Market
Cap ($M)
2,972
3,527
238
198,570
19,354
19,354
143,719
13
12,827
12,827
107,003
Price/
Earnings
48.09
16.32
77.88
22.21
29.26
29.08
21.25
NM
27.83
26.36
26.19
Net Sales
TTM ($M)
890.57
2,141.36
196.80
46,756.00
3,053.00
3,053.00
66,853.00
23.15
4,200.90
4,200.90
14,597.36
Net Income
TTM ($M)
89.75
213.00
3.11
9,208.00
668.00
668.00
6,944.00
-0.60
551.40
551.40
4,181.53
The peer group comparison is based on Major Brewers companies of comparable size.
Earnings Yield (TTM)
Companies that exhibit both a high earnings yield
and high revenue growth are generally more
attractive than companies with low revenue growth
and low earnings yield. Companies for this scatter
plot have revenue growth rates between -7% and
29.7%. Companies with NA or NM values do not
appear.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 1, 2015
PAGE 2
February 1, 2015
NYSE: SAM
BOSTON BEER INC
Sector: Consumer Non-Discretionary Brewers Source: S&P
Annual Dividend Rate
NA
Annual Dividend Yield
NA
COMPANY DESCRIPTION
The Boston Beer Company, Inc. produces and sells
alcohol beverages primarily in the United States,
Canada, Europe, Israel, the Caribbean, the Pacific Rim,
Mexico, and Central and South America. The company
sells approximately 50 beers under the Samuel Adams or
the Sam Adams brand names; 10 flavored malt
beverages under the Twisted Tea brand name; and 8
hard cider beverages under the Angry Orchard brand
name. It sells its products to a network of wholesale
distributors, who in turn sell to retailers, such as pubs,
restaurants, grocery stores, convenience stores, package
stores, stadiums, and other retail outlets. The Boston
Beer Company, Inc. was founded in 1984 and is based in
Boston, Massachusetts.
BOSTON BEER INC
One Design Center Place, Suite 850
Boston, MA 02210
USA
Phone: 617-368-5000
http://www.bostonbeer.com
Beta
0.59
Market Capitalization
$3.0 Billion
52-Week Range
$202.78-$325.00
Price as of 1/29/2015
$318.34
STOCK-AT-A-GLANCE
Below is a summary of the major fundamental and technical factors we consider when determining our
overall recommendation of SAM shares. It is provided in order to give you a deeper understanding of our
rating methodology as well as to paint a more complete picture of a stock's strengths and weaknesses. It is
important to note, however, that these factors only tell part of the story. To gain an even more comprehensive
understanding of our stance on the stock, these factors must be assessed in combination with the stock’s
valuation. Please refer to our Valuation section on page 5 for further information.
FACTOR
SCORE
5.0
Growth
out of 5 stars
weak
Measures the growth of both the company's income statement and
cash flow. On this factor, SAM has a growth score better than 90% of
the stocks we rate.
strong
5.0
Total Return
out of 5 stars
weak
Measures the historical price movement of the stock. The stock
performance of this company has beaten 90% of the companies we
cover.
strong
5.0
Efficiency
out of 5 stars
weak
Measures the strength and historic growth of a company's return on
invested capital. The company has generated more income per dollar of
capital than 90% of the companies we review.
strong
4.5
Price volatility
out of 5 stars
weak
Measures the volatility of the company's stock price historically. The
stock is less volatile than 80% of the stocks we monitor.
strong
5.0
Solvency
out of 5 stars
weak
Measures the solvency of the company based on several ratios. The
company is more solvent than 90% of the companies we analyze.
strong
0.5
Income
out of 5 stars
weak
Measures dividend yield and payouts to shareholders. This company
pays no dividends.
strong
THESTREET RATINGS RESEARCH METHODOLOGY
TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both
price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to
perform against a general benchmark of the equities market and interest rates. While our model is
quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include
expected equities market returns, future interest rates, implied industry outlook and forecasted company
earnings. Objective elements include volatility of past operating revenues, financial strength, and company
cash flows.
Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown
as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of
acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings
growth; and the financial strength of the underlying company as compared to its stock's valuation as
compared to projected earnings growth; and the financial strength of the underlying company as compared
to its stock's performance. These and many more derived observations are then combined, ranked, weighted,
and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of
selecting stocks.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 1, 2015
PAGE 3
February 1, 2015
NYSE: SAM
BOSTON BEER INC
Sector: Consumer Non-Discretionary Brewers Source: S&P
Annual Dividend Rate
NA
Annual Dividend Yield
NA
Consensus EPS Estimates² ($)
IBES consensus estimates are provided by Thomson Financial
1.33
6.60 E
7.98 E
Q4 FY14
2014(E)
2015(E)
Market Capitalization
$3.0 Billion
52-Week Range
$202.78-$325.00
Price as of 1/29/2015
$318.34
FINANCIAL ANALYSIS
BOSTON BEER INC's gross profit margin for the third quarter of its fiscal year 2014 is essentially unchanged
when compared to the same period a year ago. The company managed to grow both sales and net income at
a faster pace than the average competitor in its industry this quarter as compared to the same quarter a year
ago. BOSTON BEER INC has weak liquidity. Currently, the Quick Ratio is 0.87 which shows a lack of ability to
cover short-term cash needs. The company's liquidity has increased from the same period last year,
indicating improving cash flow.
At the same time, stockholders' equity ("net worth") has greatly increased by 46.53% from the same quarter
last year. Overall, the key liquidity measurements indicate that the company is in a position in which financial
difficulties could develop in the future.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the
next 12-months. To learn more visit www.TheStreetRatings.com.
INCOME STATEMENT
Net Sales ($mil)
EBITDA ($mil)
EBIT ($mil)
Net Income ($mil)
Beta
0.59
Q3 FY14
269.73
71.82
62.23
37.93
Q3 FY13
216.41
50.56
43.54
25.69
Q3 FY14
57.18
572.30
0.58
412.38
Q3 FY13
43.73
432.43
0.64
281.42
Q3 FY14
56.57%
26.62%
23.07%
1.56
15.68%
21.76%
Q3 FY13
56.56%
23.36%
20.12%
1.59
15.99%
24.58%
Q3 FY14
1.53
0.00
NA
NA
Q3 FY13
1.39
0.00
NA
NA
Q3 FY14
13
0.00
2.79
31.77
NA
85,137
Q3 FY13
13
0.00
1.89
22.09
NA
45,670
BALANCE SHEET
Cash & Equiv. ($mil)
Total Assets ($mil)
Total Debt ($mil)
Equity ($mil)
PROFITABILITY
Gross Profit Margin
EBITDA Margin
Operating Margin
Sales Turnover
Return on Assets
Return on Equity
DEBT
Current Ratio
Debt/Capital
Interest Expense
Interest Coverage
SHARE DATA
Shares outstanding (mil)
Div / share
EPS
Book value / share
Institutional Own %
Avg Daily Volume
2 Sum of quarterly figures may not match annual estimates due to
use of median consensus estimates.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 1, 2015
PAGE 4
February 1, 2015
NYSE: SAM
BOSTON BEER INC
Sector: Consumer Non-Discretionary Brewers Source: S&P
Annual Dividend Rate
NA
Annual Dividend Yield
NA
RATINGS HISTORY
Our rating for BOSTON BEER INC has not changed
since 8/6/2009. As of 1/29/2015, the stock was
trading at a price of $318.34 which is 2.1% below its
52-week high of $325.00 and 57.0% above its
52-week low of $202.78.
2 Year Chart
BUY: $140.80
$400
$300
$200
2013
2014
MOST RECENT RATINGS CHANGES
Date
Price
Action
1/29/13
$140.80 No Change
Beta
0.59
Market Capitalization
$3.0 Billion
Price/Earnings
1
2
3
premium
Price reflects the closing price as of the date listed, if available
RATINGS DEFINITIONS &
DISTRIBUTION OF THESTREET RATINGS
(as of 1/29/2015)
29.29% Hold - We do not believe this stock offers
conclusive evidence to warrant the purchase or sale of
shares at this time and that its likelihood of positive total
return is roughly in balance with the risk of loss.
1
2
3
TheStreet Ratings
14 Wall Street, 15th Floor
New York, NY 10005
www.thestreet.com
Research Contact: 212-321-5381
Sales Contact: 866-321-8726
4
Price/Book
1
2
5
3
4
5
1
2
3
4
5
3
4
5
discount
SAM 30.33
Peers 19.73
• Premium. The P/CF ratio, a stock’s price divided by
the company's cash flow from operations, is useful
for comparing companies with different capital
requirements or financing structures.
• SAM is trading at a significant premium to its peers.
Price to Earnings/Growth
1
2
3
premium
4
5
discount
SAM 1.75
Peers 4.14
• Discount. The PEG ratio is the stock’s P/E divided
by the consensus estimate of long-term earnings
growth. Faster growth can justify higher price
multiples.
• SAM trades at a significant discount to its peers.
Earnings Growth
1
2
3
4
lower
5
higher
SAM 29.80
Peers -2.51
• Higher. Elevated earnings growth rates can lead to
capital appreciation and justify higher
price-to-earnings ratios.
• SAM is expected to have an earnings growth rate
that significantly exceeds its peers.
Sales Growth
discount
SAM 4.64
Peers 4.16
• Premium. In the absence of P/E and P/B multiples,
the price-to-sales ratio can display the value
investors are placing on each dollar of sales.
• SAM is trading at a premium to its industry on this
measurement.
2
premium
discount
SAM 10.02
Peers 5.96
• Premium. A higher price-to-book ratio makes a
stock less attractive to investors seeking stocks
with lower market values per dollar of equity on the
balance sheet.
• SAM is trading at a significant premium to its peers.
Price/Sales
1
Price/CashFlow
discount
SAM 39.92
Peers 22.61
• Premium. A higher price-to-projected earnings ratio
than its peers can signify a more expensive stock
or higher future growth expectations.
• SAM is trading at a significant premium to its peers.
premium
22.83% Sell - We believe that this stock is likely to
decline by more than 10% over the next 12 months, with
the risk involved too great to compensate for any
possible returns.
5
SAM 48.09
Peers 23.88
• Premium. A higher P/E ratio than its peers can
signify a more expensive stock or higher growth
expectations.
• SAM is trading at a significant premium to its peers.
premium
47.87% Buy - We believe that this stock has the
opportunity to appreciate and produce a total return of
more than 10% over the next 12 months.
4
discount
premium
To
Buy
Price as of 1/29/2015
$318.34
VALUATION
BUY. BOSTON BEER INC's P/E ratio indicates a significant premium compared to an average of 23.88 for the
Beverages industry and a significant premium compared to the S&P 500 average of 19.08. For additional
comparison, its price-to-book ratio of 10.02 indicates a significant premium versus the S&P 500 average of
2.69 and a significant premium versus the industry average of 5.96. The current price-to-sales ratio is well
above the S&P 500 average and above the industry average, indicating a premium. Upon assessment of these
and other key valuation criteria, BOSTON BEER INC proves to trade at a premium to investment alternatives
within the industry.
Price/Projected Earnings
From
Buy
52-Week Range
$202.78-$325.00
1
2
3
lower
4
5
higher
SAM 29.69
Peers 4.40
• Higher. A sales growth rate that exceeds the
industry implies that a company is gaining market
share.
• SAM has a sales growth rate that significantly
exceeds its peers.
DISCLAIMER:
The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but
TheStreet Ratings cannot guarantee its accuracy and completeness, and that of the opinions based thereon. Data is provided
via the COMPUSTAT® Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well as
other third-party data providers.
TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided
for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or
other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a
qualified securities professional, before you make any investment. None of the information contained in this report constitutes,
or is intended to constitute a recommendation by TheStreet Ratings of any particular security or trading strategy or a
determination by TheStreet Ratings that any security or trading strategy is suitable for any specific person. To the extent any of
the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the
investment needs of any specific person. Your use of this report is governed by TheStreet, Inc.'s Terms of Use found at
http://www.thestreet.com/static/about/terms-of-use.html.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 1, 2015
PAGE 5