Boston Beer (NYSE:SAM) and Craft Brew Alliance (NASDAQ:BREW) could stand to be the biggest beneficiaries from the tax reform packages currently on the table, creating a lift of about 30% in earnings per share for both, an analyst wrote Monday.
Pablo Zuanic, an analyst for Susquehanna Financial Group, said that while a lot more still needs to transpire, including the convergence of the Senate and House plans, both companies could benefit heavily from a lower corporate tax rate and from proposals to reduce excise taxes for smaller brewers.
According to the Senate Republicans’ tax reform passed early Saturday, the federal excise tax of craft beer will be cut in half to $3.50 from $7.00 for the first 60,000 barrels for domestic brewers that produce less than 2 million barrels per year, which greatly impact Craft Brew Alliance, which produces around 760,000 barrels per year.
“The federal excise tax will be cut to $16 (from $18) for the first 6 million barrels for all other brewers (and beer importers). For producers with sales of more than 6 million barrels/year (BUD, TAP, STZ), the federal excise tax will remain at $18,” Zunaic wrote.
But it’s not just brewing companies that stand to benefit. Zuanic also calls out other big food and beverages companies who could see a net income jump by about 20%, including J.M. Smucker Company (NYSE:SJM), Blue Buffalo Pet Products Inc. (NASDAQ:BUFF), The Hershey Company (NYSE:HSY), Hain Celestial Group Inc. (NASDAQ:HAIN), TreeHouse Foods, Inc. (NYSE:THS) and Molson Coors Brewing (NYSE:TAP).
Regarding cash held overseas, Zuanic estimates beverage giants, The Coca-Cola Company (NYSE:KO) and Anheuser-Busch InBev (NYSE:BUD), will likely be the biggest winners.
Negotiators from both the Senate and House are expected to meet on Monday to start crafting a joint bill, which will then be sent to President Donald Trump for his signature.