Boston Beer Analysis
Matthew Schreck
Management 511: Financial Decision Making
Boston Beer Company
April 18, 2013
Amelia Drobile
Boston Beer Company
History and Financial Position
Boston Beer Company (SAM) is a brewery in Massachusetts most commonly known for its Samuel Adams line of “craft” beers. The Samuel Adams line of beer was introduced in 1985. Since then the company has grown to do over 580 million dollars in revenue each year. 580 million is a very small piece of the food and beverage industry but the amount of shareholder wealth they are providing is impressive. Boston Beer Company has been named one of the top publically traded businesses to watch in 2013 by Forbes.
Boston Beer Company is actually part of two markets. In the overall U.S. Beer market they have a mere one percent of the market. However, they own 22% of the craft beer market. In their industry, 66% of those competing in the craft brew market are brewpubs, which generally do not do mass distribution giving Boston Beer Company an edge. (Smith, 2011) Boston Beer Company has one major difference from its competitors. The company has no debt. The entire company runs on cash even though they have a 50 million dollar line of credit available to them, which they have never used. The company purchased Diageo’s Pennsylvania Brewery in June of 2008 for 55 million dollars cash so that they could produce 100% of their product without having to subcontract larger orders out. Boston Beer Company is capitalized with no bonds or preferred stock, only 13.6 million shares of common stock. (Smith, 2011) Boston Beer Company’s cost of capital is 6.60% since their weighted cost of equity is 6.60% and their weighted cost of debt is 0.00%.
(Market Grader Inc., 2013)
Price to Revenue Ratio (Price to Sales)
Boston Beer Company’s price to revenue ratio (TTM) is 3.54 The price to revenue ratio is usually applied in place of the price to earnings ratio. This ratio is usually applied to
Management 511: Financial Decision Making
Boston Beer Company
April 18, 2013
Amelia Drobile
Boston Beer Company
History and Financial Position
Boston Beer Company (SAM) is a brewery in Massachusetts most commonly known for its Samuel Adams line of “craft” beers. The Samuel Adams line of beer was introduced in 1985. Since then the company has grown to do over 580 million dollars in revenue each year. 580 million is a very small piece of the food and beverage industry but the amount of shareholder wealth they are providing is impressive. Boston Beer Company has been named one of the top publically traded businesses to watch in 2013 by Forbes.
Boston Beer Company is actually part of two markets. In the overall U.S. Beer market they have a mere one percent of the market. However, they own 22% of the craft beer market. In their industry, 66% of those competing in the craft brew market are brewpubs, which generally do not do mass distribution giving Boston Beer Company an edge. (Smith, 2011) Boston Beer Company has one major difference from its competitors. The company has no debt. The entire company runs on cash even though they have a 50 million dollar line of credit available to them, which they have never used. The company purchased Diageo’s Pennsylvania Brewery in June of 2008 for 55 million dollars cash so that they could produce 100% of their product without having to subcontract larger orders out. Boston Beer Company is capitalized with no bonds or preferred stock, only 13.6 million shares of common stock. (Smith, 2011) Boston Beer Company’s cost of capital is 6.60% since their weighted cost of equity is 6.60% and their weighted cost of debt is 0.00%.
(Market Grader Inc., 2013)
Price to Revenue Ratio (Price to Sales)
Boston Beer Company’s price to revenue ratio (TTM) is 3.54 The price to revenue ratio is usually applied in place of the price to earnings ratio. This ratio is usually applied to
References: Smith, B. (2011, August 30). Buffett-Munger Screener Highlight - Boston Beer Company (Sam). Retrieved from Guru Focus website: http://www.gurufocus.com/news/144123/buffettmunger-screener-highlight--boston-beer-company-sam Market Grader Inc. (2013, March 30). Boston Beer Co., Inc.. Retrieved from Market Grader Inc website: http://www.marketgrader.com/MG.Services/servlet/pdf.PDFServer?ticker=SAM Boston Beer Company, Inc. (2013). Proxy Statement 2013. Retrieved from Boston Beer Company website: http://www.bostonbeer.com/phoenix.zhtml?c=69432&p=irol-overview Richardson, T. (2012, January 27). Boston Beer pouring millions into Lehigh Valley. Retrieved from The Morning Call Website: http://articles.mcall.com/2012-01-27/business/mc-allentown-boston-beer-20120127_1_craft-beers-samuel-adams-beer-yuengling Boston Beer Company, Inc. (2013) Corporate Governance Guidelines. Retrieved from Boston Beer Company website: http://www.bostonbeer.com/phoenix.zhtml?c=69432&p=irol-governance MorningStar. (2013, April 18). Boston Beer Company, Inc. Class A (SAM). Retrieved from MorningStar website: http://insiders.morningstar.com/trading/executive-compensation.action?t=SAM Boston Beer Company, Inc. (2012) 10-K Annual Report 2012. Retrieved from Boston Beer Company website: http://www.bostonbeer.com/phoenix.zhtml?c=69432&p=irol-overview