Boston Beer Is Too Expensive
Despite my love for a good Boston Lager, shares of Boston Beer (NYSE: SAM) are overpriced. The stock gained too much traction this year based on hopes for strength in seltzer as well as the Dogfish Head Craft Brewing acquisition, while the actual performance of the business did not keep up. The brewer had been having a tough time reinvigorating depletions of its iconic Samuel Adams lineup of beers, and looked to M&A as a way to become more competitive. The $300 million merger with Dogfish, completed in July, was a logical step, as the two organizations had already been involved in various ventures prior to the deal. Despite this, the deal really isn't that big, and earnings and guidance aren't enough to justify the stock's price tag.
In the first quarter of reporting that includes Dogfish Head, Boston Beer reported depletion growth of 30% year over year. The increase was credited to strong performance in its lineup of Truly Hard Seltzer, Twisted Tea, and, of course, the additional Dogfish Head products. Weakness in depletions for Sam Adams and Angry Orchard continues to be a problem. The following is a snapshot of the quarter:
Source Fool.com
