The Cider House Rules for Brewers: Anheuser-Busch InBev NV (ADR) (BUD), Boston Beer Co Inc (SAM)

Molson Coors is also the slowest grower as analysts predict a sluggish 4.80% five year growth rate (yoy) compared to 9.10% for Anheuser-Busch InBev NV (ADR) (NYSE:BUD) and 10% for Boston Beer Co Inc (NYSE:SAM). Analysts are lukewarm on Molson Coors with 2 buys, 6 holds, and 2 underperforms with a median price target of $47.00.

Boston Beer Co Inc (NYSE:SAM) is the smallest of these ($1.88 billion market cap) but has 200 craft beer brands under its belt (talk about a beer belly!). Its Angry Orchard brand is now the number one cider brand in the US and it only took eight months from its launch to take the top spot according to the 2012 annual report. There are also five varieties of Angry Orchard as opposed to the one and two ciders at Molson Coors and Anheuser-Busch respectively.

Although beloved by craft beer connoisseurs the stock has its detractors with a 22% short interest. Analysts are less bullish on the name as well with 1 buy, 2 holds, and 4 underperforms with a median price target of $142.00.

Boston Beer has a 26 forward P/E and at 15.52% has almost half the operating margin of Anheuser-Busch’s 31.66% operating margin but higher than Molson Coors’ at 11.48%. It does have the best debt to cash position however, with $797,000 total debt to $32.2 million cash.

Also in its favor is that since 1973 when mass domestic beers had 99% US market share that number has dwindled to 24% as craft beers gain prominence. It also runs a lean workforce at 1,000 workers compared to 18,700 at Molson Coors and 118,000 at Anheuser-Busch.

Last call for cider

Boston Beer already has a first mover advantage in cider with number one rank and five varieties available. As the smallest brewer bringing in women, young people, and the gluten-intolerant to try malternatives will help their sales. Cider is already popular overseas so American adoption will help this domestic brewer the most. Its impressive total return may slow some but the company will still outperform.

At an $185 billion market cap Anheuser-Busch won’t see much impact but longer term cider could lure a new generation of customers. Molson Coors is the value name here with the lowest P/E and highest yield but it’s not the grower the other two are.

That said, due diligence requires some cider tasting. Be forewarned, cider is refreshing but potent. Bottoms up!

The article The Cider House Rules for Brewers originally appeared on Fool.com and is written by AnnaLisa Kraft.

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