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. , the number one craft brewer in America? Nope. It actually might provide the firm with some free advertising.
Boston Beer 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 in the space is the aptly named Craft Brewers Alliance, 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. 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 Co., 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 and Craft Brewers. The stock has lagged the overall market for awhile. I'd hold off on purchasing the shares.
There might not be any Sam Adams beer served in Pittsburgh during the Penguins-Bruins playoff series, but you can still purchase shares of Boston Beer.
And while Coors, Molson's, Red Hook and Omission might be readily available in the taverns of the Steel City, you might not want to buy the stocks of their brewers.
As I'm writing this, the Bruins are ahead in the series 3-0. One more victory and they move on to the finals. Maybe the players will be drinking Sam Adams out of the Stanley Cup instead of a can.
Boston Beer's Samuel Adams brand helped to redefine beer and kick off the craft beer revolution in the United States. Success breeds competition, though, and while just a few years ago Boston Beer had claim over most of the craft beer shelf, today the field is crowded. Can Boston Beer rise above the rest, or will it be squeezed between small local breweries on one side and global beer giants on the other? To help you decide, The Fool's compiled a premium research report filled with everything you need to know about Boston Beer's risks and opportunities. Just click here now to find out whether Boston Beer is a buy today.
Mark Morelli has a position in Boston Beer. The Motley Fool recommends Boston Beer and Molson Coors Brewing Company. The Motley Fool owns shares of 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. Is this post wrong? Click here. Think you can do better? Join us and write your own!
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