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Boston Beer Still Looks Expensive

We view shares of the narrow-moat beermaker as pricey and suggest investors wait for a more attractive entry point.


Sonia Vora: Shares of Boston Beer have soared since the beginning of the year, as improving depletion trends have bolstered confidence about the firm's top-line prospects. However, we think the market is overly optimistic about the company's prospects in a slowing craft beer market and suggest investors wait for a more attractive entry point.

While we expect ongoing premiumization trends will help craft beer volumes outpace the overall beer category longer term, we see evidence to suggest that craft momentum is slowing. We estimate volume growth in the craft segment, which now holds a nearly 13% share of domestic beer volume, fell to a midsingle-digit clip in 2016 and 2017. While this pales in comparison to the roughly 15% rate averaged over the prior five years, it is still more favorable than the roughly flat overall beer market. 

Sonia Vora does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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