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Boston Beer’s Top and Bottom Line Rose in Fiscal 2015

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Price movement of Boston Beer

Boston Beer Company (SAM) fell by 2.2% to close at $181.02 per share at the end of the third week of February 2016. The price movement on a weekly, monthly, and year-to-date (or YTD) basis is 0.79%, 10.6%, and -10.4%, respectively.

At times, the stock has broken the support of all moving day averages. Currently, SAM is trading 2.3% above its 20-day moving average, 3.8% below its 50-day moving average, and 17.7% below its 200-day moving average.

The iShares Russell 2000 Growth ETF (IWO) invests 0.29% of its holdings in Boston Beer. The ETF tracks a market-cap-weighted index of US small-cap growth stocks. The index selects from stocks ranked 1,001 to 3,000 by market cap based on two growth factors.

The Vanguard S&P Mid-Cap 400 Growth ETF (IVOG) invests 0.26% of its holdings in Boston Beer. The ETF tracks a market-cap-weighted index of growth companies from the S&P 400. The YTD price movement of IVOG is -7.8% as of February 18, 2016.

The market caps of Boston Beer’s competitors are as follows:

  • Constellation Brands (STZ): $27.9 billion
  • Molson Coors Brewing Company (TAP): $18.4 billion
  • Compania Cervecerias Unidas (CCU): $3.7 billion
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Performance of Boston Beer in 4Q15 and fiscal 2015

Boston Beer reported 4Q15 net revenue of $215.1 million, a fall of 1.2% compared to net revenue of $217.8 million in 4Q14. It sold 0.96 million barrels in 4Q15 compared to 0.98 million in 4Q14.

Its net income and EPS (earnings per share) fell to $16.1 million and $1.21, respectively, in 4Q15 compared to $19.1 million and $1.40, respectively, in 4Q14.

The year-to-date depletions through the six weeks ended February 6, 2016, fell by 3% compared to the prior-year period.

Fiscal 2015 results

In fiscal 2015, SAM reported net revenue of $959.9 million, a rise of 6.3% YoY (year-over-year). It sold 4.3 million barrels in fiscal 2015, a rise of 3.7% YoY. Its net income and EPS rose to $98.4 million and $7.25, respectively, in fiscal 2015 compared to $90.7 million and $6.69, respectively, in fiscal 2014.

Meanwhile, its cash and cash equivalents and inventories rose by 23.3% and 10.1%, respectively, in fiscal 2015. Its current ratio and debt-to-equity ratio rose to 2.0 and 0.40, respectively, in fiscal 2015, compared to 1.9 and 0.39, respectively, in fiscal 2014.

The PE (price-to-earnings) and PBV (price-to-book value) ratios of Boston Beer are 24.8x and 5.1x, respectively, as of February 19, 2016.

Projections

The company has made the following projections for fiscal 2016:

  • EPS in the range of $7.60 to $8.00
  • depletions and shipment percentage growth in the mid-single digits
  • national price increases in the range of 1% to 2%
  • gross margin in the range of 52% to 54%
  • effective tax rate of ~37%
  • capital spending in the range of $60 million to $80 million
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