MillerCoors Buys Craft Brewer - If You Can't Beat Them, Buy Them

Molson Coors Brewing Company (TAP) is the world's fifth-largest global brewer. Molson Coors Brewing Company has 15,000 employees worldwide, 18 breweries, and a broad portfolio of over 40 brands, including Molson Canadian, Coors Light and Carling.

SABMILLER PLC (SBMRY) is one of the world's largest brewers with brewing interests or distribution agreements in over sixty countries across six continents. The principal activities of the Company and its subsidiaries are the manufacture, distribution and sale of beverages. The group's brands include premium international beers such as Grolsch, Miller Genuine Draft, Peroni Nastro Azzurro and Pilsner Urquell, as well as an exceptional range of market leading local brands. Outside the USA, SABMiller plc is also one of the largest bottlers of Coca-Cola products in the world.

Together these two giants form MillerCoors LLC and they are the latest macro brewer to enter the craft beer market, NOT by making better beer on their own, but via an acquisition. The firms announced today that they had acquired Saint Archer Brewing, San Diego, California. Saint Archer produces @35000 bbl/year. The deal will close next month.

This purchase comes on the heels of another high-profile acquisition as Heineken also announced this week that it was purchasing a 50% portion of famed craft brewer Lagunitas.

Macro brewers remain stymied by the better craft beers, and keep losing market share to the far more numerous competitors. Miller Coors hopes that they can have an easier time of penetrating the market by pushing the popular Saint Archer IPA across the US.

These sorts of arrangements pose a conundrum for craft beer aficionados as drinkers want to try quality beers from across the nation, but are reticent to do so once the craft brand is "tainted" by its association with a big macro brewer. MillerCoors promises that Saint Archer will remain independent, and just "benefit" from large-sale distribution and sales resources. But, often that doesn't pass muster with the notoriously picky craft drinkers.

Meanwhile the big boys continue to claim craft cannot continue to expand, that "real men" drink weak American lagers such as Budweiser and Coors, and that many of the upstarts will soon go under. So far, that has not been the case, and mocking craft beer drinkers via Super Bowl ads and other means has been a colossal waste of resources which would be better spent on ingredients and some better brews.

Below, we present the latest top-ten list of major beer brewing/beverage stocks from our models. They are ranked according to their one-month forecast return figures.

Ticker

Company Name

Market Price

Valuation

Last 12-M Return

1-M Forecast Return

1-Yr Forecast Return

P/E Ratio

Sector Name

KNBWY

KIRIN HLDGS CO

13.81

N/A

4.46%

0.13%

1.51%

N/A

Consumer Staples

CCU

CERV UNIDAS-ADR

20.99

-11.31%

-5.71%

0.12%

1.49%

18.23

Consumer Staples

BUD

ANHEUSER-BU ADR

108.06

-6.11%

-3.07%

0.07%

0.82%

19.76

Consumer Staples

HEINY

HEINEKEN NV

39.015

N/A

0.87%

0.06%

0.74%

N/A

Consumer Staples

SAM

BOSTON BEER INC

213.34

-17.36%

-1.09%

0.01%

0.15%

29.41

Consumer Staples

DEO

DIAGEO PLC-ADR

105.95

N/A

-11.57%

-0.06%

-0.72%

18.29

Consumer Staples

TAP

MOLSON COORS-B

68.44

25.92%

-2.49%

-0.06%

-0.75%

18.04

Consumer Staples

ABEV

AMBEV-PR ADR

5.03

-15.86%

-26.35%

-0.11%

-1.27%

17.34

Consumer Staples

SBMRY

SABMILLER PLC

46.25

N/A

-17.73%

-0.17%

-2.06%

19.21

Consumer Staples

CABGY

CARLSBERG A/S

14.96

N/A

-19.72%

-0.27%

-3.19%

N/A

Consumer Staples

 

Below is today's data on TAP and SBMRY:

TAP: ValuEngine continues its HOLD recommendation on MOLSON COORS-B for 2015-09-09. Based on the information we have gathered and our resulting research, we feel that MOLSON COORS-B has the probability to ROUGHLY MATCH average market performance for the next year. The company exhibits ATTRACTIVE Company Size but UNATTRACTIVE Book Market Ratio.
 

ValuEngine Forecast

 

Target
Price*

Expected
Return

1-Month

68.40 -0.06%

3-Month

70.13 2.47%

6-Month

72.59 6.06%

1-Year

67.93 -0.75%

2-Year

84.67 23.72%

3-Year

77.09 12.64%

 

Valuation & Rankings

Valuation

25.92% overvalued

Valuation Rank

10

1-M Forecast Return

-0.06%

1-M Forecast Return Rank

46

12-M Return

-2.49%

Momentum Rank

63

Sharpe Ratio

0.49

Sharpe Ratio Rank

80

5-Y Avg Annual Return

8.93%

5-Y Avg Annual Rtn Rank

72

Volatility

18.10%

Volatility Rank

78

Expected EPS Growth

3.08%

EPS Growth Rank

29

Market Cap (billions)

11.29

Size Rank

91

Trailing P/E Ratio

18.04

Trailing P/E Rank

61

Forward P/E Ratio

17.50

Forward P/E Ratio Rank

38

PEG Ratio

5.87

PEG Ratio Rank

6

Price/Sales

2.94

Price/Sales Rank

31

Market/Book

79.08

Market/Book Rank

2

Beta

1.00

Beta Rank

45

Alpha

-0.07

Alpha Rank

46

SBMRY: ValuEngine continues its HOLD recommendation on SABMILLER PLC for 2015-09-09. Based on the information we have gathered and our resulting research, we feel that SABMILLER PLC has the probability to ROUGHLY MATCH average market performance for the next year. The company exhibits ATTRACTIVE Company Size but UNATTRACTIVE Book Market Ratio.

ValuEngine Forecast

 

Target
Price*

Expected
Return

1-Month

46.17 -0.17%

3-Month

46.47 0.47%

6-Month

46.82 1.23%

1-Year

45.30 -2.06%

2-Year

47.91 3.58%

3-Year

50.66 9.54%

 

Valuation & Rankings

Valuation

n/a

Valuation Rank

n/a

1-M Forecast Return

-0.17%

1-M Forecast Return Rank

37

12-M Return

-17.73%

Momentum Rank

43

Sharpe Ratio

0.49

Sharpe Ratio Rank

80

5-Y Avg Annual Return

10.06%

5-Y Avg Annual Rtn Rank

74

Volatility

20.46%

Volatility Rank

74

Expected EPS Growth

9.97%

EPS Growth Rank

43

Market Cap (billions)

74.60

Size Rank

99

Trailing P/E Ratio

19.21

Trailing P/E Rank

57

Forward P/E Ratio

17.47

Forward P/E Ratio Rank

38

PEG Ratio

1.93

PEG Ratio Rank

21

Price/Sales

n/a

Price/Sales Rank

n/a

Market/Book

45.71

Market/Book Rank

3

Beta

1.25

Beta Rank

32

Alpha

-0.14

Alpha Rank

38

Disclosure: None.

ValuEngine.com is an independent research provider, producing buy/hold/sell recommendations, target price, and valuations on over 7,000 US and Canadian equities every trading ...

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