Valuation Scorecard: Stock Rating F-Lowest (4/2/24)-Boston Beer Co Inc. (SAM).

To achieve average annual stock market performance of 9.0% over the next 6 years, Boston Beer shares will need to reach $503. Upper quartile performance will require a $592 Boston Beer stock price by 2029. At the current price of $300, what is the market’s view of Boston Beer’s future operating performance?

Executive Summary

• Price Target Research identifies Boston Beer as having: low stability, very low expected growth, low financial strength, and very low profitability.
• Low valuation, below market shareholder returns. Current valuation levels are below average relative to the Boston Beer Peer Group. Recent market returns have underperformed the Boston Beer Peer Group. Total shareholder returns expected to significantly lag the overall equity market. Based on current investor expectations, Boston Beer shares should reach a level of $151 by 2029 — an -10.8% per year total shareholder return. A 2029 stock price of $503 would reflect median performance and a price of $592 would be required to reach upper quartile performance.
• Boston Beer’s historical growth is slightly below average. Historical growth has been below average relative to the Boston Beer Peer Group and forecasted growth is relatively very low. Equity Growth, Asset Growth, and Revenue Growth have lagged. These factors have negatively affected market perceptions of Boston Beer. Boston Beer’s historical income statement and balance sheet growth are not available. Boston Beer’s consensus growth expectations are lower than historical growth.
• Return on Equity, Pretax Margin, and Pretax ROA are group lagging. These factors have negatively affected market perceptions of Boston Beer. The company has below average cash and will have to work to generate attractive investment opportunities and improve valuation.
• Boston Beer’s risk profile is unfavorable. Overall variability has been very low with very low revenue variability, very high E.P.S. variability, and above average stock price volatility. Financial Strength is very low and earnings’ expectations are below average. The debt/capital ratio has declined.

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