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Boston Beer: Great Beer, Flat Valuation

Stocks in this article: SAM BUD TAP COST

NEW YORK ( F.A.S.T. Graphs) -- Boston Beer (SAM) is probably best known for its flagship brand, Sam Adams. After that, the company is likely recognized by its enthusiastic founder, Jim Koch. Born into a five-generation family of brewers, Jim carried on the tradition in 1984 by brewing his great-great-grandfather's recipe for Boston Lager.

Today, the company has 30 distinctive award winning styles of beer, with more than 70 total offerings. You've likely heard of some of the seasonal choices including Oktoberfest, Summer Ale, Winter Lager and Pumpkin Ale. Boston Beer claims that it has won more awards in international beer-tasting competitions during the last five years than any other brewery in the world.

Yet, despite its accolades, Boston Beer controls only about 1.3% of the U.S. beer market share. Granted this is impressive for a craft brewer, but it pales in comparison to the giants Anheuser-Busch Inbev (BUD) and Molson Coors (TAP), perhaps indicating an opportunity for future growth.

At the forefront of this endeavor is the explosion of the craft brewing market. For instance, this market grew by about 15% over the last two years, compared with just 1% growth for the overall U.S. beer market. In 1980 there were just 89 breweries in contrast to the more than 2,500 today.

Or an astute investor might even pick up on the fact that craft brews now represent about 30% of Costco's (COST) beer sales. In other words, craft brews have been exceedingly popular of late, yet they still have the propensity to grab future market share.

All this seems like good news for Boston Beer and its fellow craft breweries. Indeed, Boston Beer's business has been booming over the past 15 years. I have provided an earnings graph as demonstrated through the powerful lens of F.A.S.T. Graphs fundamentals analyzer software tool.

One can see that earnings (orange line) grew at a robust 19% a year for the last decade and a half. Aside from some hiccups after the last two recessions, there has been a clear trend toward increased profitability.

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