Reviewing Reeds (OTCMKTS:REED) and Boston Beer (NYSE:SAM)

Reeds (OTCMKTS:REED) and Boston Beer (NYSE:SAM) are both small-cap consumer staples companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, institutional ownership, dividends, risk, analyst recommendations, earnings and valuation.

Profitability

This table compares Reeds and Boston Beer’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Reeds	-42.48%	-358.36%	-59.26%
Boston Beer	-3.42%	9.99%	6.48%

Volatility and Risk

Reeds has a beta of 0.31, suggesting that its share price is 69% less volatile than the S&P 500. Comparatively, Boston Beer has a beta of 0.83, suggesting that its share price is 17% less volatile than the S&P 500.

Valuation and Earnings

This table compares Reeds and Boston Beer”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Reeds	$29.14 million	0.39	-$13.15 million	($1.35)	-0.71
Boston Beer	$2.09 billion	0.84	$108.47 million	($6.79)	-24.91

Boston Beer has higher revenue and earnings than Reeds. Boston Beer is trading at a lower price-to-earnings ratio than Reeds, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings and price targets for Reeds and Boston Beer, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Reeds	0	0	0	1	4.00
Boston Beer	3	8	1	0	1.83

Boston Beer has a consensus price target of $206.91, indicating a potential upside of 22.33%. Given Boston Beer’s higher possible upside, analysts clearly believe Boston Beer is more favorable than Reeds.

Institutional & Insider Ownership

51.5% of Reeds shares are held by institutional investors. Comparatively, 81.1% of Boston Beer shares are held by institutional investors. 0.0% of Reeds shares are held by company insiders. Comparatively, 27.4% of Boston Beer shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

Boston Beer beats Reeds on 11 of the 15 factors compared between the two stocks.

About Reeds

Reed's, Inc. engages in the manufacture and distribution of natural beverages in the United States. The company offers Reed's craft ginger beer; Reed's real ginger ales; Reed's Classic Mules; Reed's Hard Ginger Ale; Reed's ready to drink products; and Virgil's handcrafted sodas. It sells its products to natural food and gourmet retailers, grocery store chains, mass merchants, club stores, convenience and drug stores, liquor stores, industrial cafeterias, and on-premise bars and restaurants, as well as directly to consumers through www.drinkreeds.com. The company was formerly known as Original Beverage Corporation and changed its name to Reed's, Inc. in 2001. Reed's, Inc. was founded in 1987 and is headquartered in Norwalk, Connecticut.

About Boston Beer

The Boston Beer Company, Inc produces and sells alcohol beverages primarily in the United States. The company's flagship beer is Samuel Adams Boston Lager. It offers various beers, hard ciders, flavored malt beverages, and hard seltzers under the Samuel Adams, Twisted Tea, Truly, Angry Orchard, Dogfish Head, Angel City, and Coney Island brand names. The company markets and sells its products to a network wholesaler in the United States, as well as wholesalers, importers, or other agencies that in turn sell to retailers, such as grocery stores, club stores, convenience stores, liquor stores, bars, restaurants, stadiums, and other e-commerce retail outlets. It sells its products in Canada, Europe, Israel, Australia, New Zealand, the Caribbean, the Pacific Rim, Mexico, and Central and South America. The Boston Beer Company, Inc. was founded in 1984 and is based in Boston, Massachusetts.