SAM

We rate BOSTON BEER CO INC (SAM) as a Hold with a composite score of 64.1/100 at a current price of $227.86. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in value (86th percentile) and stability (85th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (33th percentile) and momentum (48th percentile) tempers our overall conviction. We assign a Narrow Moat rating (45/100), Low uncertainty, and Standard capital allocation.

Key items to watch: quarterly earnings execution and sector-level competitive dynamics. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

BOSTON BEER CO INC holds a top-quartile position (#0 of 50) within the Manufacturing sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 64.1/100 places it at rank #342 in our full 7,333-stock universe. At $2.3B in market capitalization, BOSTON BEER CO INC is a mid-cap player in the Manufacturing space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue contraction of -7% combined with momentum at the 48th percentile paints a cautious picture of the near-term business outlook. The market appears to be pricing in continued challenges, and a catalyst for reversal is not clearly visible from current data.

The margin cascade tells an important story: gross margins of 49% (+6.3pp vs sector) narrow to operating margins of 10% (+8.8pp vs sector) and net margins of 7.4%, yielding a gross-to-net conversion rate of 15%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.

At a current price of $227.86, BOSTON BEER CO INC appears undervalued relative to its fundamentals. Our value factor score of 86/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 15.2x (a 32% discount to the sector median of 22.3x), EV/EBITDA of 9.2x (near the sector median), P/B of 2.8x, P/S of 1.1x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Low uncertainty rating to BOSTON BEER CO INC. The company exhibits strong financial stability with a beta of 0.41, conservative leverage (0% D/E), and a stability factor in the 85th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

Specific risk factors that inform our assessment include: low beta of 0.41 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 85th percentile and quality factor at the 84th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 49% provide a buffer against cost pressures; conservative leverage (0% D/E) limits balance sheet risk; above-average stability (85th percentile) suggests predictable business dynamics. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate BOSTON BEER CO INC's capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 18.1%, and the balance sheet is managed within acceptable parameters (D/E: 0%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; BOSTON BEER CO INC falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. Absent a dividend, the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, BOSTON BEER CO INC receives a Hold rating with a composite score of 64.1/100 (rank #342 of 7,333). Our quantitative framework assigns a Narrow Moat (45/100, trend: stable), Low uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 67/100.

Our analysis supports a neutral stance on BOSTON BEER CO INC. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.