Should Value Investors Buy The Boston Beer Company (SAM) Stock?

Zacks
01-16

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company value investors might notice is The Boston Beer Company (SAM). SAM is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. SAM has a P/S ratio of 1.4. This compares to its industry's average P/S of 1.41.

Finally, we should also recognize that SAM has a P/CF ratio of 14.03. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. SAM's P/CF compares to its industry's average P/CF of 39.13. SAM's P/CF has been as high as 24.90 and as low as 13.88, with a median of 16.76, all within the past year.

These figures are just a handful of the metrics value investors tend to look at, but they help show that The Boston Beer Company is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, SAM feels like a great value stock at the moment.

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