Boston Beer Company Essay

730 WordsOct 26, 20113 Pages
Boston Beer Company- Case Analysis You are the investment banker assigned with the task of setting the IPO price for Boston Beer Company (BBC). Prepare a research report to support your recommendation. As you prepare this report, you may find that you would like to have more field information than what the case offers you. However, the case contains critical information that gives you a reasonable basis to compute its valuation. In addition use the following information for 1995.1 Sales ($ millions) Redhook Pete’s BBC 25.89 59.17 151.31 EPS .75 .25 .40 Book value/share 7.70 4.33 3.00 Price 27.00 24.75 ? Also, use the following information for BBC for 1996. Make additional assumptions as necessary (and state any additional assumptions)…show more content…
Use the information here in your analysis. 1 2. Business description and a brief history of the company. Does the company have any unique strategic positioning within the industry? – One paragraph 3. Present a qualitative assessment of the future outlook for the company. For example, are there any new products in the pipeline? Do you anticipate any competitive threats? Based on these developments, do you expect BBC’s growth and profitability to improve deteriorate, or stay about the same as in the past? 4. Revenue Forecasts and Free cash flow forecasts for the next ten years– • Specifically explain if you are forecasting revenue and FCF growths and profit margins that are significantly different from the company’s historical experience and why. 5. Present a DCF analysis and determine BBC’s intrinsic value. Assume that BBC’s Enterprise Value/ NOPLAT will be 18 ten years from now (check for sensitivities by assuming a multiple of either 15 or 20). 6. Present a valuation based on valuation ratios (P/B, P/E, P/S) for comparable firms. What price would you recommend based on these valuation ratios? Based on your recommended price, is BBC’s P/B ratio bigger or smaller than that of Redhook? Of Pete’s? Can you justify this difference? Do the same analysis for P/E and P/S ratios. (Note: Suppose a particular valuation ratio for one firm is 25 and you recommend a corresponding valuation multiple of

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