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- NYSE:SAM
Is Now An Opportune Moment To Examine The Boston Beer Company, Inc. (NYSE:SAM)?
The Boston Beer Company, Inc. (NYSE:SAM), is not the largest company out there, but it saw significant share price movement during recent months on the NYSE, rising to highs of US$417 and falling to the lows of US$306. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Boston Beer Company's current trading price of US$314 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Boston Beer Company’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for Boston Beer Company
What's The Opportunity In Boston Beer Company?
Boston Beer Company is currently expensive based on my price multiple model, where I look at the company's price-to-earnings ratio in comparison to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Boston Beer Company’s ratio of 57.03x is above its peer average of 34.06x, which suggests the stock is trading at a higher price compared to the Beverage industry. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that Boston Beer Company’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What kind of growth will Boston Beer Company generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Boston Beer Company's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? SAM’s optimistic future growth appears to have been factored into the current share price, with shares trading above industry price multiples. At this current price, shareholders may be asking a different question – should I sell? If you believe SAM should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on SAM for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for SAM, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
If you want to dive deeper into Boston Beer Company, you'd also look into what risks it is currently facing. While conducting our analysis, we found that Boston Beer Company has 2 warning signs and it would be unwise to ignore these.
If you are no longer interested in Boston Beer Company, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
Valuation is complex, but we're here to simplify it.
Discover if Boston Beer Company might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
About NYSE:SAM
Boston Beer Company
Produces and sells alcohol beverages primarily in the United States.
Flawless balance sheet and slightly overvalued.