By Rob Otman
Boston Beer Company (NYSE: SAM) is a $2 billion company today. Investors that bought shares one year ago are sitting on a -7.52% total return. That’s below the S&P 500’s return of 17.92%.
Boston Beer Company stock is underperforming the market. It’s beaten down… so is it a good time to buy? To answer this question we’ve turned to the Investment U Stock Grader. Our research team built this system to diagnose the financial health of a company.
Our system looks at six key metrics…
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Earnings-per-Share (EPS) Growth: Boston Beer Company reported a recent EPS growth rate of -16.36%. That’s below the beverage industry average of -12.25%. That’s not a good sign. We like to see companies that have higher earnings growth.
Price-to-Earnings (P/E): The average price-to-earnings ratio of the beverage industry is 58.1. And Boston Beer Company’s ratio comes in at 21.56. It’s trading at a better value than many of its competitors.
Debt-to-Equity: The debt-to-equity ratio for Boston Beer Company stock is 0. That’s below the beverage industry average of 61.9. The company is less leveraged.
Free Cash Flow per Share Growth: Boston Beer Company’s FCF has been lower than its competitors over the last year. That’s not good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It’s one of our most important fundamental factors.
Profit Margins: The profit margin of Boston Beer Company comes in at 3.53% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Boston Beer Company’s profit margin is below the beverage average of 11.16%. So that’s a negative indicator for investors.
Return on Equity: Return on equity tells us how much profit a company produces with the money shareholders invest. The ROE for Boston Beer Company is 19.76%, and that’s below its industry average ROE of 22.4%.
Boston Beer Company stock passes two of our six key metrics today. That’s why our Investment U Stock Grader rates it as a hold with caution.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth. For more details, click here.
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Source:: Investment You
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