Which beer shares go well with the Champions League Finals?

This Saturday we have the largest European football match of the year, the Champions League finals (for those not familiar, this is basically Europe’s ‘Super Bowl’) between Bayern Munich and Chelsea, and several large brands will get a chance to pitch themselves to millions of football fans on television, among them MasterCard (MA), Ford (F) and Heineken (HEIO). In the Champions League finals last year, Heineken’s logos were visible for a total of 28 minutes and 38 seconds during the full broadcast of the game – that is a fairly large exposure to few millions of viewers worldwide.

With Heineken being one of the main sponsors for this match and Carlsberg as main sponsor for the UEFA European Championship, starting on the 8th of June, I thought it would be interesting to compare few of the largest beer brands in market ahead of Saturday’s match. Who is the outperforming the market? How are the competitors priced?

Comparing the beer brewers displayed in table one to Bloomberg’s brewery index (BI GL Breweries CP Index), we see several outperforming the broad industry (Chart 2). The BI GL Breweries CP Index has returned roughly 7.5 percent YTD, displayed as the bright green line in chart 2.

Analysts expect SABMiller (SAB), Asahi (XTKS: 2502) and Kirin Holdings (XTKS: 2503) all to have more than ten percent cumulative annual growth in their earnings per share over the coming three years. Being expected to have the highest growth potential, these stocks are priced slightly higher than their competitors having FY1 P/E of 18.4, 12.2 and 19.2 respectively. The overall industry estimate for the BI GL Breweries CP Index is a price per earnings level of 16.5.

In order to compare these breweries further, let us look at how their earnings are priced relative to the earnings they are expected to return on assets (chart 2), and compare that with the industry averages. Using the return on assets should be an indicator of the operational efficiencies that are within the company.

Royal Unibrew (RBREW) sticks out, with a P/E FY1 lower than the industry and many of its larger competitors. Furthermore, Boston Beer Co (SAM) is expected to return handsome 18.2 percent on its assets for the next year, but that comes at a price per earnings well above the industry average. I recall my colleague Peter Bo Kiær writing about cheap alcohol stocks in the market several months ago, where Royal Unibrew and Boston Beer Co. were pointed out by him as potential takeover candidates of the market. That still seems to apply today.

Other stocks seem to be clustered around the center, where Molson Coors Brewing sticks a bit out, delivering similar ROA as its large competitors, but is trading at a lower P/E for FY1. However, what makes Royal Unibrew stick even more out is that the stock has outperformed its peers YTD with roughly 23 percent increase in its stock price.

So, maybe your money would be better spent on some shares in the outliers here rather than pints during the match on Saturday. What do you think?

Using Saxo Bank’s Stock Screener
You can do a similar exercise using Saxo Bank’s stock screener & equity research offering. Filtering Saxo Bank’s universe of 11.500 stocks down to only this specific industry, including only the producers of alcoholic beverages, will give you 58 different stocks. Applying measures of PE FY1, EPS Growth CAGR next 3 years and return on assets FY1 filters will narrow the selection ever further.

Give it a try here, or even apply any other of the 250 screening criteria.