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I. Boston Beer Company Overview
The Boston Beer Company (NYSE: SAM) operates in the high-end alcoholic beverage industry
and is one of the largest craft brewers in the United States. Its portfolio includes several brand
leaders such as Truly Hard Seltzer, Samuel Adams and Angry Orchard Hard Ciders. It has also
seen great success with its hard iced tea line, Twisted Teas, which has become the best-selling
hard tea brand in the nation. The company is currently experiencing mixed growth within its
product categories, with hard seltzer and alcoholic teas leading growth and beer and hard ciders
experiencing slight declines.
The hard seltzer market size is approximately $3.8bn, with 58% of the off-premise market share
belonging to White Claw and 26% belonging to Truly1
. Meanwhile, Twisted Tea dominates the
hard tea category with over 90% market share. Strong performance by both brands is due to
beverage trends shifting towards more low-calorie, gluten-free and health-conscious choices.
The craft beer market experienced a significant downturn due to the pandemic, adding to the
declining presence of Boston Beer Company’s beer brands for the last two years. Its brands only
account for 1% of the U.S. beer market1
. It is a highly fragmented industry that is highly
competitive with low barriers to entry. Thus, beer companies have shifted towards producing more
flavors to differentiate their product lines and to satisfy increasing preferences in flavored beers.
This trend suggests new opportunities for SAM as a high-end beer producer.
With the hard seltzer market expected to grow to $30bn by 20301 and as optimism increases in the
craft beer sector as we slowly return back to normalcy, we anticipate a lot of growth and
opportunity ahead for the company.
1 Seeking Alpha
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II. Profitability Analysis
Revenue
SAM is a growth story within a mature industry. After experiencing declining revenue growth in
2016 (-5.6%) and 2017 (-4.8%), SAM rebounded strongly in the following years with year-overyear growth rates of 15.4%, 25.5% and 38.9% in 2018, 2019 and 2020 respectively. The torrid
top-line growth was primarily driven by its Truly hard-seltzer segment and the integration of its
craft beer brand, Dogfish Head Brewery, which was acquired in March 2019. As of the fiscal year
2020, its Truly hard-seltzer segment accounts for approximately 48% of its revenue and owns 26%
share of the fast-growing U.S. hard-seltzer market2
. However, it is unlikely that the company can
sustain its strong pace of growth for several reasons. New entrants in the hard-seltzer space and
fickle customer loyalty to brands intensify competition in the lucrative market. Its flagship brands
Samuel Adams and Angry Orchard, also face headwinds in their respective categories, driven by
a consumer shift towards lower consumption of traditional beer and craft beer3
.
1
Goldman Sachs Equity Research Report
2
IBISWorld
3
IBISWorld
863 996
1,250
1,736
FY2017A FY2018A FY2019A FY2020A
Revenue (US $ MM)
3
Margins
In addition to having strong year-over-year revenue growth, SAM has maintained stable operating
margins, between 16% and 20%, for the past four fiscal years. Gross margins have trended
downwards recently, in part driven by SAM’s explosive growth in seltzer and a constraint in
manufacturing capacity. However, while management has gradually added capacity, the increases
have not been sufficient to meet demand. The higher costs were attributed to increased reliance on
production at third-party breweries. The recent uptick in operating margin was attributed to a
temporary decrease in SG&A costs, according to management, as the pandemic reduced
advertising spend. Promotional spending on brands is expected to pick up in the second half of
2021, which will pressure operating margin4
.
4 Morningstar Research
Angry Orchard
11%
Samuel Adams
11%
Twisted Tea
26%
Truly Hard
Seltzer
49%
Other
3%
Revenue breakdown by segment
4
Returns Analysis
SAM’s ROA has remained relatively stable, around 15 – 16%, other than in 2019 when it
significantly increased its asset base through the Dogfish acquisition. At the same time, its ROE
has stayed fairly consistent, which can be explained by the fact that it has little debt. However, its
earnings per share has increased much more quickly. Over the past three years, this change
corresponds to the increase in APIC, suggesting that it is primarily driven by reinvestment of
earnings back into the company.
52.1% 51.4%
49.1%
47.4%
FY2017A FY2018A FY2019A FY2020A
Gross Margin
19.6%
16.9% 16.8%
18.6%
FY2017A FY2018A FY2019A FY2020A
EBITDA Margin
11.5%
9.3% 8.8%
11.1%
FY2017A FY2018A FY2019A FY2020A
Net Margin
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Return on Assets
FY2017A FY2018A FY2019A FY2020A
Net Income 99.0 92.7 110.0 192.0
Interest Expense x (1 – 21%) 0.0 0.0 0.0 -0.1
Sum 99.0 92.7 110.0 191.9
Total Average Assets 592.8 604.7 847.0 1,216.4
ROA 16.7% 15.3% 13.0% 15.8%
Return on Equity
FY2017A FY2018A FY2019A FY2020A
Total Average SE 435.1 441.9 598.0 846.3
ROE 22.8% 21.0% 18.4% 22.7%
Earnings Per Share
all others in USD MM FY2017A FY2018A FY2019A FY2020A
Net Income 99.0 92.7 110.0 192.0
Weighted Average Shares Outstanding 12.2 11.7 11.9 12.3
Diluted Earnings Per Share (reported) 8.1 7.8 9.2 15.5
Additional Paid-In Capital 372.6 405.7 571.8 599.7
Change in Diluted Earnings Per Share -3% 17% 70%
Change in APIC 9% 41% 5%
Peer Comparison
In terms of revenue growth, SAM has far outpaced its peers in the past two fiscal years, with a
CAGR of 32.1%. For context, our peer set is relatively diversified, including both domestic and
international wine and spirits makers. SAM’s revenue concentration in the hard-seltzer segment
not only buffeted declining or flat sales during the pandemic, as experienced by other global
competitors, but was rather integral to the company’s growth. SAM’s margins trail those of its
peers, primarily because of its unique product segment. Unlike most of its peers, which include
much larger players in the mature beer and alcoholic beverages industries, SAM’s revenue is
mainly driven by a hyper-growth hard-seltzer niche segment and its traditional but declining craft
and hard cider products. Hence, SAM’s margins are lower due to heavier SG&A spending as a
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proportion of revenue, which includes brand promotion and non-recurring integration costs.
III. Cash Flow Analysis
Overall, SAM has a very healthy balance sheet with strong liquidity and little leverage. With
regards to its cash flow profile, SAM’s operating cash index over the past few years has trended
downwards, but has hovered around 1, suggesting that its earnings are largely backed by cash and
supplemented by non-cash items, such as depreciation.
Cash Flow Profile
in USD millions FY2017A FY2018A FY2019A FY2020A
Net Income 99.0 92.7 110.0 192.0
Cash Flow from Operations 136.0 163.4 178.2 253.4
Cash Flow from Investing -32.9 -55.3 -258.8 -139.1
Cash Flow from Financing -128.5 -65.3 8.9 12.3
Net Change in Cash -25.4 42.8 -71.7 126.6
32.1%
3.0% 2.2%
(1.6%) (1.7%) (2.1%) (3.2%) (5.3%) (6.0%) (6.4%)
The Boston Beer
Company, Inc.
Constellation
Brands, Inc.
Tsingtao Brewery
Company Limited
Pernod Ricard SA Diageo plc Kirin Holdings
Company, Limited
Carlsberg A/S Molson Coors
Beverage
Company
Anheuser-Busch
InBev SA/NV
Heineken N.V.
Revenue CAGR (FY2018 – 2020)
Peer Comparison
0.90
1.20 1.11 0.98
FY2017A FY2018A FY2019A FY2020A
Operating Cash Index
(Operating Cash Flow – Depreciation) / Net Income
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Working Capital Management
SAM’s high earnings quality corresponds to the health of its liquidity. Inventory has increased at
a steady rate. SAM’s payables have also gone up as its accounts receivables have shrunk over the
same time frame, suggesting that the company has been improving its cash conversion cycle. This
is in line with the trend of increasing cash flow from operations, which indicates that SAM, a
mature firm, is able to effectively fund its current liabilities with current assets.
Capital Expenditure & Financing
Capex has largely outpaced depreciation in recent years as the company invested in its breweries,
increasing manufacturing capacity, driving efficiencies and cost reductions and supporting
innovation. Other than its $330 MM acquisition of Dogfish Head Brewery in 2019, its recent
investments have been organic. While SAM is an established player in a mature industry, the trend
of rising capex is reasonable because the company has been investing in manufacturing capacity
for key growth segments, the Truly hard-seltzer and cider divisions.
From a financing perspective, SAM has been able to largely maintain a cash inflow due to cash
flow from operations. SAM had no debt before 2019, and with the $72 million of debt on its
balance sheet currently, the firm has a high-interest coverage ratio given its robust operating cash
3 -2 -12 -24 -2 -21 0 -25 -25 6 21
41
FY2017A FY2018A FY2019A FY2020A
Changes in Working Capital
(in USD millions)
Change in Acc. Receivable Change In Inventories Change in Acc. Payable
51 52 56 66
33
56
93
140
FY2017A FY2018A FY2019A FY2020A
Depreciation vs. Capex
(in USD millions)
Depreciation Capex
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flows. The company also capitalized on a rich stock price, which has increased by roughly 200%
since December 2019 and issued $15 million and $19 million of stock in the past two years.
IV. Pro-forma Financial Statements
Our projected profitability and cash flow analysis is reflected in our pro-forma financial statements
below:
Income Statement Projections ($mm)
Sales Growth Assumptions
We agree with management’s optimistic projections of 26.2% and 14.6% sales growth in 2022 and
2023, respectively, as the economy reopens and the alcohol and leisure sectors experience highvolume demand. Further, SAM’s Truly brand has proven a significant leader in the hard seltzer
market, which is forecasted to grow from $4bn in 2020 to $30bn by 2030.
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However, despite the
pandemic-related market expansion, we predict the firm’s revenue growth to slow in 2023 as the
market stabilizes post-pandemic and early brand innovators such as Truly and White Claw lose
their first-mover advantage in the hard seltzer market. We expect the firm to reach a long-term
growth rate of 2% by 2029 as the seltzer market matches the growth rates of the more mature beer
and cider industries.
5 Goldman Sachs Equity Research Report
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Growth Timeline Assumptions
2021 2022 2023 2024 2025 2026 2027 2028 2029
Sales growth 43.1% 26.2% 14.6% 10.0% 7.5% 5.0% 4.0% 3.0% 2.0%
GAAP Earnings Growth 54.1% 46.3% 29.5% (2.4%) 7.6% 5.1% 4.1% 3.1% 2.2%
Cash Earnings Growth 44.9% 46.3% 29.5% (2.4%) 7.6% 5.1% 4.1% 3.1% 2.2%
Margin Assumptions
Further, we assumed a gross margin of 48.3% from 2022, growing 1.4% due to expected
economies of scale realized in the near-term growth cycle.
Margin Timeline Assumptions
2021 2022 2023 2024 2025 2026 2027 2028 2029
Gross margin 46.9% 48.3% 48.3% 48.3% 48.3% 48.3% 48.3% 48.3% 48.3%
EBITDA margin 20.8% 21.2% 23.5% 21.2% 21.2% 21.2% 21.2% 21.2% 21.2%
EBIT margin 15.2% 17.6% 19.9% 17.6% 17.6% 17.6% 17.6% 17.6% 17.6%
Balance Sheet Projections ($mm)
Boston Beer Company currently has a healthy balance sheet with excess cash reserves growing
from $163mm reported in 2020 to a forecasted $3.56bn in 2030 without major transactions
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occurring in the following 10-year period. These gains are driven primarily by expected seltzer
sales growth in post-pandemic reopening. Additionally, we forecast significant gross PP&E
investments, growing from $689mm in last fiscal year to $4.55bn in 2030 as the firm modernizes
and scales its factory assets to meet rising demand.
CapEx and Depreciation Timeline Assumptions
2021 2022 2023 2024 2025 2026 2027 2028 2029
CapEx/Sales 9.0% 8.5% 8.8% 8.6% 8.7% 8.7% 8.7% 8.7% 8.7%
Depreciation/Sales 5.6% 3.6% 3.6% 3.6% 3.6% 3.6% 3.6% 3.6% 3.6%
Cash Flow Statement Projections ($mm)
IV. DCF Valuation
Using the projected financial statements described above, we built a DCF model that calculates
Boston Beer Company’s unlevered free cash flow for years 2021 – 2030. When discounting the
free cash flows, we assumed a 6% discount rate.
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For terminal value we used the perpetuity growth method using a 2% growth rate, after which we
discounted the terminal value using a 6% discount rate. Upon summing up the present values of
free cash flows and the present value of the terminal value, we found an enterprise value of
$12,483. By subtracting net debt of -$163, we found an equity value of $12,647, which resulted in
$1,014.52 equity value per share. Given that we made assumptions for the WACC and perpetuity
growth rate, we also conducted a sensitivity analysis to see the effect of our assumptions on the
enterprise value, equity value and equity value per share.
We also used the EBITDA multiple method to find terminal value, by assuming a 22.5x exit
multiple, based on our analysis of comparable companies. The projected EBITDA for 2030 is
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$1,054 and with a 22.5x multiple, the terminal value is $23,722 and $13,246 on a present value
basis. Summing up the present value of cash flows and the terminal value, we obtain an enterprise
value of $15,915, which results in $1,289.81 equity value per share. Similar to the perpetuity
growth method, we conducted a sensitivity analysis on enterprise value, equity value and equity
value per share.
V. Earnings-based Valuation
The Boston Beer Company, Inc. Earnings Based Valuation
PARAMETERS FY1 FY2 Ltg
EPS Forecasts 24.55 33.34 37.58% (using the mean analyst forecast)
Book value/share (last fye) 84.86 38.0%
Discount Rate 6.00%
Dividend Payout Ratio 0.000
Next Fsc Year end 2021
Current Fsc Mth (1 to 12) 5
Target ROE (industry avg.) 0.1500
Year 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Long-term EPS Growth Rate (Ltg) 38.0% 38.0% 38.0% 40.0% 40.0%
Forecasted EPS $24.55 $33.34 $46.02 $63.52 $87.67 $122.74 $171.84
Beg. of year BV/Shr 84.86 109.41 142.75 188.77 252.29 339.96 462.70
Implied ROE 30.5% 32.2% 33.6% 34.8% 36.1% 37.1%
ROE 28.9% 30.5% 32.2% 33.6% 34.8% 36.1% 37.1% 32.7% 28.3% 23.9% 19.4% 15.0%
Abnormal ROE 22.9% 24.5% 26.2% 27.6% 28.8% 30.1% 31.1% 26.7% 22.3% 17.9% 13.4% 9.0%
Beg of year BV/shr 84.86 109.41 142.75 188.77 252.29 339.96 462.70 634.54 842.10 1,080.27 1,337.97 1,597.90
End of year BV/shr 109.41 142.75 188.77 252.29 339.96 462.70 634.54 842.10 1,080.27 1,337.97 1,597.90 1,837.59
Required rate (r) 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0%
Discount rate 1.060 1.124 1.191 1.262 1.338 1.419 1.504 1.594 1.689 1.791 1.898 2.012
Perpetuity 305.95 397.17 524.11 689.01 903.37 1,202.47 1,596.98 1,772.31 1,851.10 1,795.09 1,577.35 1,191.16
PV of Abnormal ROE 0.22 0.22 0.22 0.22 0.21 0.21 0.21 0.17 0.13 0.10 0.07 0.04
Incremental value each year 18.36 23.83 31.45 41.34 54.20 72.15 95.82 106.34 111.07 107.71 94.64 71.47
Cumulative Incremental value 18.36 42.19 73.63 114.97 169.18 241.33 337.14 443.48 554.55 662.25 756.89 828.36
Implied price $419.40 $537.32 $699.67 $911.07 $1,186.35 $1,566.87 $2,069.45 $2,358.17 $2,552.77 $2,605.76 $2,479.58 $2,157.00
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The EPS forecasts for SAM was $24.55 and $33.34 in 2021 and 2022 respectively.6 The EPS
growth estimate for the next 5 years is 37.58% and our current discount rate assumption is 6%.
The current ROE for the company is 26.78%, but since the company is currently in a growth stage,
it would be more suitable to use industry ROEs for our assumptions. For the industry ROE, I took
the overall average of the industry average for Breweries for the past 3 years of 11.6% and the
industry average for Distilleries and Vintners for the past 3 years of 18.4% to get 15% as the Target
ROE.7 Since Boston Beer Company is both a craft brewer and a market leader in hard seltzers and
teas, it is suitable to use both industries as a guideline. This earnings-based valuation brings us to
an implied share price range of $911.07 – $1,186.35 when looking at the company 4-5 years down
the road. With a current share price of $1,108.42, as of 5/14/2021, the company’s value in the
market is in line with our valuation.
VI. Multiples-based Valuation
We performed a multiples-based valuation through the application of the guideline public
company method. We derived market multiples from the trading prices of companies that are
engaged in a similar line of business and that are actively traded on the public market. Noted is
that it is challenging to identify pure play publicly traded companies comparable to SAM given its
high growth seltzer business unit; however, we defined the following publicly traded companies
as the closest peer group:
6 Yahoo Finance
7 Capital IQ
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When determining the appropriate multiple range, we considered SAM’s operating performance,
historical and project growth rates, and capitalization relative to the comparable companies.
We noted that SAM’s EBITDA and EBIT margins were below both the average and median of the
comparable companies, however, its net income margin (FY+1 and FY+2) was in line with the
comparable companies.
($ in millions, except per share data)
Company Name Ticker Share Price Market Cap Enterprise Value
Constellation Brands, Inc. NYSE:STZ 230.87 44,704 55,556
Molson Coors Beverage Company NYSE:TAP 58.38 12,442 20,638
Carlsberg A/S CPSE:CARL B 182.08 28,043 32,300
Anheuser-Busch InBev SA/NV ENXTBR:ABI 74.82 146,918 242,864
Heineken N.V. ENXTAM:HEIA 118.77 68,530 86,883
Tsingtao Brewery Company Limited SEHK:168 10.09 17,522 14,666
Diageo plc LSE:DGE 46.44 108,700 128,997
Pernod Ricard SA ENXTPA:RI 209.06 54,465 64,498
Kirin Holdings Company, Limited TSE:2503 19.23 16,031 22,485
Comparable Company Operating Statistics
($ in millions) LTM Margins FY+1 Margins FY+2 Margins
Company Name EBITDA EBIT Net Income EBITDA EBIT Net Income EBITDA EBIT Net Income
The Boston Beer Company, Inc. 19.0% 14.3% 11.1% 20.8% 15.2% 11.9% 21.2% 17.6% 13.8%
Constellation Brands, Inc. 43.3% 36.1% 23.2% 36.9% 33.2% 22.3% 37.5% 33.4% 23.0%
Molson Coors Beverage Company 25.3% 16.5% (7.9%) 21.1% 12.9% 8.3% 21.1% 13.1% 8.7%
Carlsberg A/S 23.8% 16.4% 10.3% 23.6% 16.6% 10.3% 24.0% 17.2% 10.8%
Anheuser-Busch InBev SA/NV 34.5% 26.1% 4.8% 36.0% 27.0% 11.5% 37.1% 28.2% 13.0%
Heineken N.V. 18.9% 9.8% (1.0%) 22.1% 14.6% 8.5% 23.7% 16.5% 10.1%
Tsingtao Brewery Company Limited 12.8% 9.1% 8.8% 14.3% 11.5% 8.7% 15.0% 12.7% 9.2%
Diageo plc 34.3% 30.7% 9.8% 33.7% 30.2% 21.8% 35.1% 31.5% 23.1%
Pernod Ricard SA 30.3% 25.8% 3.3% 30.0% 26.2% 17.0% 30.9% 27.3% 18.3%
Kirin Holdings Company, Limited 13.0% 8.9% 3.9% 13.1% 8.1% 5.5% 14.4% 9.6% 6.5%
Low 12.8% 8.9% (7.9%) 13.1% 8.1% 5.5% 14.4% 9.6% 6.5%
High 43.3% 36.1% 23.2% 36.9% 33.2% 22.3% 37.5% 33.4% 23.1%
75th Percentile 34.3% 26.1% 9.8% 33.7% 27.0% 17.0% 35.1% 28.2% 18.3%
Average 24.1% 17.9% 4.0% 24.2% 18.4% 11.5% 25.2% 19.5% 12.5%
Median 25.3% 16.5% 4.8% 23.6% 16.6% 10.3% 24.0% 17.2% 10.8%
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In terms of both historical and projected growth rates, SAM far exceed the average and median (as
well as the high end) growth rates of the comparable companies.
The brewer and distiller industry is a highly leveraged industry. The average Total Debt to
EBITDA is 3.36x and Net Debt to EBITDA is 3.11x. SAM, as of FY 20, did not have any interestbearing debt on its balance sheet.
Based on the analysis of SAM relative to its comparable companies, we considered LTM, FY+1,
and FY+2 TEV / Revenue and TEV / EBITDA multiples. Ultimately, we determined that EBITDA
was the most appropriate financial metric to value SAM given it is the most common metric used
in the brewer/distiller industry. Additionally, given the significant growth expected in the seltzer
market, and SAM’s competitive position, we determined that averaging the FY+1 and FY+2
Comparable Company Growth Rates
($ in millions) 2-Year Hist. 1-Year Hist. LTM 1-Year Proj. 2-Year Proj.
Company Name Revenue EBITDA Revenue EBITDA Revenue EBITDA Revenue EBITDA Revenue EBITDA
The Boston Beer Company, Inc. 32.1% 38.3% 38.9% 53.6% 46.8% 84.4% 43.1% 56.9% 34.4% 42.0%
Constellation Brands, Inc. 3.0% (14.2%) 3.3% 322.0% 3.3% 322.0% (1.0%) (15.6%) (0.5%) (7.3%)
Molson Coors Beverage Company (5.3%) (0.9%) (10.7%) (0.5%) (10.7%) (0.5%) 5.3% (4.3%) 4.0% (0.9%)
Carlsberg A/S 0.2% 5.9% (2.8%) 2.7% (2.8%) 2.7% 7.7% 6.6% 7.0% 7.4%
Anheuser-Busch InBev SA/NV (6.0%) (12.9%) (7.9%) (20.3%) (7.9%) (20.3%) 11.0% 14.2% 7.9% 11.1%
Heineken N.V. (3.2%) (10.5%) (10.3%) (27.9%) (10.3%) (27.9%) 6.7% 25.0% 7.2% 20.2%
Tsingtao Brewery Company Limited 4.9% 19.8% 15.4% 55.4% 15.4% 55.4% 9.7% 27.7% 7.7% 19.1%
Diageo plc (4.8%) (6.3%) (4.6%) (11.4%) (4.6%) (11.4%) 20.0% 13.5% 12.5% 11.6%
Pernod Ricard SA (3.3%) (0.8%) (6.8%) (7.5%) (6.8%) (7.5%) 10.3% 7.2% 9.1% 9.1%
Kirin Holdings Company, Limited 0.9% (4.3%) 0.3% (8.3%) 0.3% (8.3%) (5.2%) (4.5%) (1.2%) 3.8%
Low (6.0%) (14.2%) (10.7%) (27.9%) (10.7%) (27.9%) (5.2%) (15.6%) (1.2%) (7.3%)
High 4.9% 19.8% 15.4% 322.0% 15.4% 322.0% 20.0% 27.7% 12.5% 20.2%
75th Percentile 0.9% (0.8%) 0.3% 2.7% 0.3% 2.7% 10.3% 14.2% 7.9% 11.6%
Average (1.5%) (2.7%) (2.7%) 33.8% (2.7%) 33.8% 7.2% 7.7% 6.0% 8.2%
Median (3.2%) (4.3%) (4.6%) (7.5%) (4.6%) (7.5%) 7.7% 7.2% 7.2% 9.1%
Comparable Company Capitalization
($ in millions) Total Debt to: Net Debt to:
Company Name Market Cap TEV Book Equity Cash Total Debt Net Debt Book Equity Total Capital EBITDA EBITDA
The Boston Beer Company, Inc. 13,339 13,175 958 163 0 (163) NMF NMF NMF NMF
Constellation Brands, Inc. 44,704 55,556 13,929 461 10,442 9,982 0.75 0.43 2.80 2.68
Molson Coors Beverage Company 12,442 20,638 12,834 533 8,327 7,794 0.65 0.39 3.49 3.26
Carlsberg A/S 28,043 32,300 7,126 1,330 4,971 3,641 0.70 0.41 2.17 1.59
Anheuser-Busch InBev SA/NV 146,918 242,864 78,351 15,648 98,564 82,916 1.26 0.56 5.92 4.98
Heineken N.V. 68,530 86,883 17,605 4,893 22,258 17,365 1.26 0.56 4.89 3.81
Tsingtao Brewery Company Limited 17,522 14,666 3,430 3,095 124 (2,971) 0.04 0.03 0.21 NMF
Diageo plc 108,700 128,997 11,438 3,887 21,417 17,530 1.87 0.65 4.00 3.28
Pernod Ricard SA 54,465 64,498 17,956 2,391 12,254 9,863 0.68 0.41 4.16 3.34
Kirin Holdings Company, Limited 16,031 22,485 10,619 1,643 6,090 4,446 0.57 0.36 2.61 1.91
Low 12,442 14,666 3,430 461 124 (2,971) 0.04 0.03 0.21 1.59
High 146,918 242,864 78,351 15,648 98,564 82,916 1.87 0.65 5.92 4.98
75th Percentile 68,530 86,883 17,605 3,887 21,417 17,365 1.26 0.56 4.16 3.46
Average 55,262 74,321 19,254 3,765 20,494 16,730 0.86 0.42 3.36 3.11
Median 44,704 55,556 12,834 2,391 10,442 9,863 0.70 0.41 3.49 3.27
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implied enterprise value indications would be most representative considering SAM’s high level
of growth expectations.
For the FY+1 EBITDA multiple, we selected 20.5x as the mid-point, notching up and down by
1.5x to form a range of indications. 20.5x EBITDA is equal to the 75th percentile EBITDA
multiples for the comparable companies. For the FY+2 EBITDA multiple, we selected 18.5x as
the mid-point, notching up and down by 1.5x. 18.5x EBITDA is equal to the 75th percentile
EBITDA multiples for the comparable companies.
Averaging the two enterprise indications ranges result in an enterprise value range of $10.6bn to
$12.3bn, with a mid-point of $11.5bn and equity value per share of $860.70 to $1,002.96, with a
mid-point of $931.83.
The Boston Beer Company, Inc. Comparable Company Analysis
($ in millions, except per share data) LTM FY+1 FY+2
Comparable Companies Revenue EBITDA Revenue EBITDA Revenue EBITDA
Constellation Brands, Inc. 6.4x 14.9x 6.5x 17.7x 6.5x 17.4x
Molson Coors Beverage Company 2.2x 8.6x 2.0x 9.6x 2.0x 9.4x
Carlsberg A/S 3.4x 14.1x 3.1x 13.2x 2.9x 12.2x
Anheuser-Busch InBev SA/NV 5.0x 14.6x 4.7x 13.0x 4.4x 12.0x
Heineken N.V. 3.6x 19.1x 3.4x 15.3x 3.1x 13.2x
Tsingtao Brewery Company Limited 3.2x 24.8x 3.1x 22.0x 3.0x 19.8x
Diageo plc 8.3x 24.1x 7.4x 21.9x 7.0x 20.0x
Pernod Ricard SA 6.6x 21.9x 6.2x 20.5x 5.7x 18.5x
Kirin Holdings Company, Limited 1.3x 9.6x 1.3x 10.1x 1.3x 8.9x
High 8.3x 24.8x 7.4x 22.0x 7.0x 20.0x
75th Percentile 6.4x 21.9x 6.2x 20.5x 5.7x 18.5x
Median 3.6x 14.9x 3.4x 15.3x 3.1x 13.2x
The Boston Beer Company, Inc.
EBITDA Multiple Range Implied Enterprise Value Range
LTM 330 x 21.0x 22.5x 24.0x = 6,922 7,417 7,911
FY+1 517 x 19.0x 20.5x 22.0x = 9,825 10,601 11,376
FY+2 665 x 17.0x 18.5x 20.0x = 11,307 12,304 13,302
Selected implied enterprise value range FY+1 9,825 10,601 11,376
FY+2 11,307 12,304 13,302
Average 10,566 11,452 12,339
Valuation Summary Range
Implied Enterprise Value $10,566 $11,452 $12,339
Net debt ($163) ($163) ($163)
Equity value $10,729 $11,616 $12,502
Equity value per share $860.70 $931.83 $1,002.96
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VII. Investment Consensus
We believe that Boston Beer Company is properly valued based on our valuations performed
below relative to its current share price of $1,108.42 as of 5/14/2021.
The current share price lies between the mid to upper ranges of our Earnings Based Valuation and
DCF Gordon Growth Valuation and in between our Relative Valuation and DCF Exit Multiple
Valuation.
We don’t believe that Boston Beer Company is an attractive investment at this time due to the
uncertainty of how increased competition will affect the hard seltzer market and whether or not
Boston Beer Company will be able to sustain its lead with its operational efficiencies falling behind
those of its peers. Truly will undoubtedly sustain the company’s growth projections as we head
Premium/(Discount) to Current Price $1,108.42
Lower Mid Upper
Earnings Based Valuation (17.8%) (5.4%) 7.0%
DCF – Gordon Growth (22.7%) (8.5%) 15.2%
DCF – Exit Multiple 7.8% 16.4% 24.9%
Comparable Companies (22.3%) (15.9%) (9.5%)
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back into normalcy. However, we believe that without innovation in product offering and backend efficiencies Boston Beer Company may find itself in a situation where competition is
beginning to take away significant market share. The company has also seen major growth recently
in its share price, leaving little room for error based on our current valuation analysis.
