Intrinsic value of Boston Beer Company, Inc. (The) - SAM

Previous Close

$402.96

  Intrinsic Value

$101.87

stock screener

  Rating & Target

str. sell

-75%

Previous close

$402.96

 
Intrinsic value

$101.87

 
Up/down potential

-75%

 
Rating

str. sell

We calculate the intrinsic value of SAM stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 4.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  9.20
  8.78
  8.40
  8.06
  7.76
  7.48
  7.23
  7.01
  6.81
  6.63
  6.46
  6.32
  6.19
  6.07
  5.96
  5.86
  5.78
  5.70
  5.63
  5.57
  5.51
  5.46
  5.41
  5.37
  5.34
  5.30
  5.27
  5.24
  5.22
  5.20
Revenue, $m
  1,088
  1,183
  1,283
  1,386
  1,493
  1,605
  1,721
  1,842
  1,967
  2,098
  2,233
  2,374
  2,521
  2,674
  2,834
  3,000
  3,173
  3,354
  3,543
  3,740
  3,946
  4,162
  4,387
  4,623
  4,869
  5,127
  5,398
  5,681
  5,977
  6,288
Variable operating expenses, $m
  941
  1,023
  1,109
  1,199
  1,292
  1,388
  1,489
  1,593
  1,701
  1,814
  1,931
  2,053
  2,180
  2,312
  2,450
  2,594
  2,743
  2,900
  3,063
  3,234
  3,412
  3,598
  3,793
  3,997
  4,210
  4,433
  4,667
  4,911
  5,168
  5,436
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  941
  1,023
  1,109
  1,199
  1,292
  1,388
  1,489
  1,593
  1,701
  1,814
  1,931
  2,053
  2,180
  2,312
  2,450
  2,594
  2,743
  2,900
  3,063
  3,234
  3,412
  3,598
  3,793
  3,997
  4,210
  4,433
  4,667
  4,911
  5,168
  5,436
Operating income, $m
  147
  160
  173
  187
  202
  217
  233
  249
  266
  284
  302
  321
  341
  362
  384
  406
  430
  454
  480
  506
  534
  563
  594
  626
  659
  694
  731
  769
  809
  851
EBITDA, $m
  204
  222
  240
  260
  280
  301
  323
  345
  369
  393
  419
  445
  472
  501
  531
  562
  595
  629
  664
  701
  740
  780
  822
  866
  912
  961
  1,012
  1,065
  1,120
  1,178
Interest expense (income), $m
  0
  0
  1
  2
  3
  4
  5
  6
  7
  8
  9
  11
  12
  13
  15
  16
  18
  20
  21
  23
  25
  27
  29
  31
  33
  35
  38
  40
  43
  46
  49
Earnings before tax, $m
  147
  159
  171
  184
  198
  212
  227
  242
  258
  274
  292
  309
  328
  347
  367
  388
  410
  433
  457
  482
  508
  535
  563
  593
  624
  656
  691
  726
  764
  803
Tax expense, $m
  40
  43
  46
  50
  53
  57
  61
  65
  70
  74
  79
  84
  89
  94
  99
  105
  111
  117
  123
  130
  137
  144
  152
  160
  168
  177
  186
  196
  206
  217
Net income, $m
  107
  116
  125
  135
  145
  155
  165
  177
  188
  200
  213
  226
  239
  253
  268
  283
  299
  316
  333
  352
  371
  390
  411
  433
  455
  479
  504
  530
  557
  586

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  699
  760
  824
  890
  959
  1,031
  1,105
  1,183
  1,263
  1,347
  1,434
  1,525
  1,619
  1,718
  1,820
  1,927
  2,038
  2,154
  2,275
  2,402
  2,534
  2,673
  2,818
  2,969
  3,127
  3,293
  3,467
  3,648
  3,839
  4,038
Adjusted assets (=assets-cash), $m
  699
  760
  824
  890
  959
  1,031
  1,105
  1,183
  1,263
  1,347
  1,434
  1,525
  1,619
  1,718
  1,820
  1,927
  2,038
  2,154
  2,275
  2,402
  2,534
  2,673
  2,818
  2,969
  3,127
  3,293
  3,467
  3,648
  3,839
  4,038
Revenue / Adjusted assets
  1.557
  1.557
  1.557
  1.557
  1.557
  1.557
  1.557
  1.557
  1.557
  1.558
  1.557
  1.557
  1.557
  1.556
  1.557
  1.557
  1.557
  1.557
  1.557
  1.557
  1.557
  1.557
  1.557
  1.557
  1.557
  1.557
  1.557
  1.557
  1.557
  1.557
Average production assets, $m
  424
  461
  500
  541
  582
  626
  671
  718
  767
  818
  871
  926
  983
  1,043
  1,105
  1,170
  1,237
  1,308
  1,382
  1,459
  1,539
  1,623
  1,711
  1,803
  1,899
  2,000
  2,105
  2,215
  2,331
  2,452
Working capital, $m
  3
  4
  4
  4
  4
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  15
  15
  16
  17
  18
  19
Total debt, $m
  17
  34
  52
  71
  90
  110
  131
  153
  176
  199
  224
  249
  275
  303
  332
  362
  393
  426
  460
  495
  533
  572
  612
  655
  699
  746
  795
  846
  899
  955
Total liabilities, $m
  196
  214
  231
  250
  270
  290
  311
  332
  355
  379
  403
  429
  455
  483
  511
  541
  573
  605
  639
  675
  712
  751
  792
  834
  879
  925
  974
  1,025
  1,079
  1,135
Total equity, $m
  502
  546
  592
  640
  690
  741
  795
  851
  908
  969
  1,031
  1,096
  1,164
  1,235
  1,308
  1,385
  1,465
  1,549
  1,636
  1,727
  1,822
  1,922
  2,026
  2,135
  2,249
  2,368
  2,493
  2,623
  2,760
  2,904
Total liabilities and equity, $m
  698
  760
  823
  890
  960
  1,031
  1,106
  1,183
  1,263
  1,348
  1,434
  1,525
  1,619
  1,718
  1,819
  1,926
  2,038
  2,154
  2,275
  2,402
  2,534
  2,673
  2,818
  2,969
  3,128
  3,293
  3,467
  3,648
  3,839
  4,039
Debt-to-equity ratio
  0.030
  0.060
  0.090
  0.110
  0.130
  0.150
  0.160
  0.180
  0.190
  0.210
  0.220
  0.230
  0.240
  0.250
  0.250
  0.260
  0.270
  0.270
  0.280
  0.290
  0.290
  0.300
  0.300
  0.310
  0.310
  0.310
  0.320
  0.320
  0.330
  0.330
Adjusted equity ratio
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719
  0.719

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  107
  116
  125
  135
  145
  155
  165
  177
  188
  200
  213
  226
  239
  253
  268
  283
  299
  316
  333
  352
  371
  390
  411
  433
  455
  479
  504
  530
  557
  586
Depreciation, amort., depletion, $m
  57
  62
  67
  72
  78
  84
  90
  96
  103
  109
  116
  123
  131
  139
  147
  156
  165
  174
  184
  194
  205
  216
  228
  240
  253
  267
  281
  295
  311
  327
Funds from operations, $m
  164
  178
  192
  207
  223
  239
  255
  273
  291
  310
  329
  349
  370
  393
  415
  439
  464
  490
  518
  546
  576
  607
  639
  673
  709
  746
  785
  826
  868
  913
Change in working capital, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
Cash from operations, $m
  164
  178
  192
  207
  222
  238
  255
  272
  290
  309
  329
  349
  370
  392
  415
  439
  464
  490
  517
  545
  575
  606
  639
  672
  708
  745
  784
  825
  867
  912
Maintenance CAPEX, $m
  -52
  -57
  -62
  -67
  -72
  -78
  -83
  -90
  -96
  -102
  -109
  -116
  -123
  -131
  -139
  -147
  -156
  -165
  -174
  -184
  -194
  -205
  -216
  -228
  -240
  -253
  -267
  -281
  -295
  -311
New CAPEX, $m
  -35
  -37
  -39
  -40
  -42
  -44
  -45
  -47
  -49
  -51
  -53
  -55
  -57
  -60
  -62
  -65
  -68
  -71
  -74
  -77
  -80
  -84
  -88
  -92
  -96
  -101
  -105
  -110
  -116
  -121
Cash from investing activities, $m
  -87
  -94
  -101
  -107
  -114
  -122
  -128
  -137
  -145
  -153
  -162
  -171
  -180
  -191
  -201
  -212
  -224
  -236
  -248
  -261
  -274
  -289
  -304
  -320
  -336
  -354
  -372
  -391
  -411
  -432
Free cash flow, $m
  77
  84
  92
  100
  108
  117
  126
  136
  146
  156
  167
  178
  189
  201
  214
  227
  240
  254
  269
  284
  300
  317
  334
  352
  371
  391
  412
  434
  456
  480
Issuance/(repayment) of debt, $m
  17
  17
  18
  19
  19
  20
  21
  22
  23
  24
  24
  25
  27
  28
  29
  30
  31
  33
  34
  36
  37
  39
  41
  43
  45
  47
  49
  51
  54
  56
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  17
  17
  18
  19
  19
  20
  21
  22
  23
  24
  24
  25
  27
  28
  29
  30
  31
  33
  34
  36
  37
  39
  41
  43
  45
  47
  49
  51
  54
  56
Total cash flow (excl. dividends), $m
  94
  101
  110
  118
  128
  137
  147
  158
  168
  180
  191
  203
  216
  229
  243
  257
  272
  287
  303
  320
  337
  356
  375
  395
  416
  438
  461
  485
  510
  536
Retained Cash Flow (-), $m
  -42
  -44
  -46
  -48
  -50
  -52
  -54
  -56
  -58
  -60
  -63
  -65
  -68
  -71
  -74
  -77
  -80
  -84
  -87
  -91
  -95
  -99
  -104
  -109
  -114
  -119
  -125
  -131
  -137
  -143
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  52
  57
  64
  71
  78
  86
  94
  102
  110
  119
  129
  138
  148
  158
  169
  180
  192
  203
  216
  229
  242
  256
  271
  286
  302
  319
  336
  354
  373
  393
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  49
  52
  55
  58
  60
  62
  63
  64
  63
  63
  61
  59
  56
  53
  50
  46
  42
  37
  33
  29
  25
  21
  18
  15
  12
  9
  7
  5
  4
  3
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

The Boston Beer Company, Inc. is a craft brewer in the United States. The Company is engaged in the business of producing and selling alcohol beverages primarily in the domestic market and in selected international markets. The Company operates through two segments: Boston Beer Company segment, and A&S Brewing Collaborative segment. The Boston Beer Company segment comprises of the Company's Samuel Adams, Twisted Tea, Angry Orchard and Truly Spiked & Sparkling brands. The A&S Brewing Collaborative segment comprises of The Traveler Beer Company, Coney Island Brewing Company, Angel City Brewing Company and Concrete Beach Brewing Company. Both segments sell low alcohol beverages. The Company produces malt beverages and hard cider at the Company-owned breweries and under contract arrangements at other brewery locations. As of December 31, 2016, the Company sold its products to a network of approximately 350 wholesalers in the United States and to a network of distributors.

FINANCIAL RATIOS  of  Boston Beer Company, Inc. (The) (SAM)

Valuation Ratios
P/E Ratio 57.3
Price to Sales 5.5
Price to Book 11.2
Price to Tangible Book
Price to Cash Flow 32.4
Price to Free Cash Flow 47.9
Growth Rates
Sales Growth Rate -5.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -32.4%
Cap. Spend. - 3 Yr. Gr. Rate -13.1%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 13.8%
Ret/ On Assets - 3 Yr. Avg. 15.6%
Return On Total Capital 19.1%
Ret/ On T. Cap. - 3 Yr. Avg. 21.8%
Return On Equity 19.2%
Return On Equity - 3 Yr. Avg. 21.9%
Asset Turnover 1.4
Profitability Ratios
Gross Margin 50.8%
Gross Margin - 3 Yr. Avg. 51.5%
EBITDA Margin 20.6%
EBITDA Margin - 3 Yr. Avg. 20.4%
Operating Margin 15.1%
Oper. Margin - 3 Yr. Avg. 15.9%
Pre-Tax Margin 15.1%
Pre-Tax Margin - 3 Yr. Avg. 15.8%
Net Profit Margin 9.6%
Net Profit Margin - 3 Yr. Avg. 10%
Effective Tax Rate 36.5%
Eff/ Tax Rate - 3 Yr. Avg. 37%
Payout Ratio 0%

SAM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SAM stock intrinsic value calculation we used $996 million for the last fiscal year's total revenue generated by Boston Beer Company, Inc. (The). The default revenue input number comes from 0001 income statement of Boston Beer Company, Inc. (The). You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our SAM stock valuation model: a) initial revenue growth rate of 9.2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for SAM is calculated based on our internal credit rating of Boston Beer Company, Inc. (The), is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Boston Beer Company, Inc. (The).
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of SAM stock the variable cost ratio is equal to 86.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for SAM stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Boston Beer Company, Inc. (The).

Corporate tax rate of 27% is the nominal tax rate for Boston Beer Company, Inc. (The). In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the SAM stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for SAM are equal to 39%.

Life of production assets of 7.5 years is the average useful life of capital assets used in Boston Beer Company, Inc. (The) operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for SAM is equal to 0.3%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $460.317 million for Boston Beer Company, Inc. (The) - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 11.610 million for Boston Beer Company, Inc. (The) is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Boston Beer Company, Inc. (The) at the current share price and the inputted number of shares is $4.7 billion.

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