Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 4 stocks made the list for top value stocks in the Brewers industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Brewers Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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4 Undervalued Brewers Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 4 undervalued stocks in the Brewers industry for Monday, April 01, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Brewers industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Big Rock Brewery Inc (USA)’s Value Grade

Value Grade:

Big Rock Brewery Inc. is a Canada-based company that produces all-natural craft beers, ciders, and other alcoholic and non-alcoholic beverages. It has a family of permanent ales and lagers, the Rock Creek series of craft ciders, seasonal and limited-edition beers and other licensed alcoholic beverages. The Company operates through two segments: wholesale and retail. The wholesale segment manufactures and distributes beer, cider, and other alcoholic beverages to and through provincial liquor boards, which are subsequently sold on to end consumers. The retail segment sells beverages, food and merchandise to end consumers on premises owned and/or operated by the Company. It also has several private label agreements, production agreements and licensing agreements. Its primary brewing, packaging and warehousing facility is located in Calgary, Alberta. It owns and operates production facilities in Alberta, British Columbia and Ontario. It has distribution facilities in Calgary and Edmonton.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Big Rock Brewery Inc (USA) has a Value Score of 62, which is considered to be undervalued.

When you look at Big Rock Brewery Inc (USA)’s price-to-sales ratio at 0.22 compared to the industry median at 1.65, this company has a lower price relative to revenue compared to its peers. This could make Big Rock Brewery Inc (USA)’s stock more attractive for value investors.

Now, let’s assess Big Rock Brewery Inc (USA)’s EV/EBITDA ratio, also known as enterprise multiple. At 85.2, when compared to the industry median of 9.9, the company may be considered overvalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Big Rock Brewery Inc (USA)’s shareholder yield is lower than its industry median ratio of 3.57%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Big Rock Brewery Inc (USA)’s price-to-book ratio is lower than its industry median ratio of 2.18. This could make Big Rock Brewery Inc (USA) more attractive to investors looking for a new addition to their portfolio.

Compania Cervecerias Unidas S.A. (ADR)’s Value Grade

Value Grade:

Compania Cervecerias Unidas S.A. is a diversified beverage company operating principally in Chile, Argentina, Bolivia, Colombia, Paraguay and Uruguay. The Company operates as a brewer, soft drinks producer, water and nectar producer, wine producer and pisco distributor. The Company's segments include Chile, International Business and Wine. The Company carries a portfolio of products, which includes a range of brands of alcoholic and non-alcoholic beer, with Cristal as its primary brand in Chile. In addition, it produces and distributes Heineken beer; distributes Sol beer and Budweiser beer, and distributes and produces Kunstmann and Austral beer in Chile. The International Business segment includes operations in Argentina, Paraguay and Uruguay. The Company, through Vina San Pedro Tarapaca S.A. (VSPT), produces and markets a range of wine products for the domestic and mainly the export market.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Compania Cervecerias Unidas S.A. (ADR) has a Value Score of 61, which is considered to be undervalued.

Compania Cervecerias Unidas S.A. (ADR)’s price-earnings ratio is 20.5 compared to the industry median at 19.5. This means that it has a higher price relative to its earnings compared to its peers. This makes Compania Cervecerias Unidas S.A. (ADR) less attractive for value investors.

Compania Cervecerias Unidas S.A. (ADR)’s price-to-book ratio is higher than its peers. This could make Compania Cervecerias Unidas S.A. (ADR) less attractive for value investors when compared to the industry median at 2.18.

You can read more about Compania Cervecerias Unidas S.A. (ADR)’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Heineken Holding NV - ADR’s Value Grade

Value Grade:

Heineken Holding NV is the Netherlands-based holding company, which holds 50.005% of the issued share capital of Heineken NV and heads the Heineken group. The object of Heineken Holding NV is to manage and supervise the management of the Heineken group and to provide services for Heineken NV. Through its subsidiaries, the Company is primarily involved in the brewing and selling of beer. The structure of Heineken Holding NV is divided into segments, which resemble operations of Heineken NV: Western Europe, Central and Eastern Europe, the Americas, Africa and the Middle East, and Asia Pacific. The shares of the Company are owned by L’Arche Green NV, FEMSA and public shareholders. Through its indirect subsidiaries, Heineken Holding NV operates in more than 70 countries worldwide. The Company operates Pivovarna Lasko dd as a majority owned subsidiary.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Heineken Holding NV - ADR has a Value Score of 62, which is considered to be undervalued.

Heineken Holding NV - ADR’s price-earnings ratio is 18.1 compared to the industry median at 19.5. This means that it has a lower price relative to its earnings compared to its peers. This makes Heineken Holding NV - ADR more attractive for value investors.

Heineken Holding NV - ADR’s price-to-book ratio is lower than its peers. This could make Heineken Holding NV - ADR fairly attractive for value investors when compared to the industry median at 2.18.

You can read more about Heineken Holding NV - ADR’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Kirin Holdings Co Ltd (ADR)’s Value Grade

Value Grade:

Kirin Holdings Company, Limited is a Japan-based company mainly engaged in the integrated beverage business and the pharmaceutical business. The Company operates in four business segments. The Domestic Beer and Spirits segment is engaged in the manufacture and sale of beer, low-malt beer, new genre products, wines and other liquor products in Japan. The Domestic Beverages segment is engaged in the manufacture and sale of soft drinks in Japan. The Oceania Integrated Beverages segment is engaged in the manufacture and sale of beer, wines, dairy products, juice drinks and other products in the Oceania region. The Pharmaceuticals segment is engaged in the manufacture and sale of pharmaceutical products. The Company is also engaged in the domestic wine business, the liquor business in Myanmar, the beverage business in North American, and the biochemical business.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Kirin Holdings Co Ltd (ADR) has a Value Score of 62, which is considered to be undervalued.

Kirin Holdings Co Ltd (ADR)’s price-earnings ratio is 15.1 compared to the industry median at 19.5. This means that it has a lower price relative to its earnings compared to its peers. This makes Kirin Holdings Co Ltd (ADR) more attractive for value investors.

Kirin Holdings Co Ltd (ADR)’s price-to-book ratio is higher than its peers. This could make Kirin Holdings Co Ltd (ADR) less attractive for value investors when compared to the industry median at 2.18.

You can read more about Kirin Holdings Co Ltd (ADR)’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Brewers Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Brewers stocks as well as other industrys.

Choosing Which of the 4 Best Brewers Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Big Rock Brewery Inc (USA) stock has a Value Grade of B.
• Compania Cervecerias Unidas S.A. (ADR) stock has a Value Grade of B.
• Heineken Holding NV - ADR stock has a Value Grade of B.
• Kirin Holdings Co Ltd (ADR) stock has a Value Grade of B.

Now that you have a bit more background about each of the 4 undervalued stocks in the Brewers industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Brewers Stocks

Want to learn more about Brewers stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 4 Undervalued Brewers Stocks for Monday, April 01
• Why Boston Beer Company Inc’s (SAM) Stock Is Up 4.49%
• Why Anheuser-Busch Inbev SA (ADR)’s (BUD) Stock Is Down 5.48%
• 3 Undervalued Brewers Stocks for Friday, March 01

AAII Disclaimer

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