Brewery earnings reports drive company stocks higher - Anheuser-Busch Companies Inc.'s stocks recover

Modern Brewery Age, Oct 14, 1991

Brewery earnings reports drive company stocks higher

Earnings reports again played the major role in determining the performance of brewery stocks in the accompanying table during 1991's third quarter end September 30.

Barring mergers, acquisitions, and the like, stock prices should mirror corporate earnings, and last quarter's performance of stocks in the brewing industry was no exception. Those companies which performed well saw that reflected in their stock price, while those that continued to struggled with the ongoing recessionary pressure on earnings saw the price of their shares fall.

The strongest performing stock last quarter was Anheuser-Busch, which bounced back from a dismal performance in the second quarter by gaining $5.25, or 10.9 percent, to close the three-month session at $53.50. The company's stock set a new 52-week high of $55.25 during the quarter before profit-takers drove it down slightly.

The reason for A-B's performance was basic: earnings were up and the company raised its dividend. Specifically, the company announced during the quarter that its second-quarter net income was $0.99 per share, up from $0.90 during the same period a year ago. In addition, Anheuser-Busch hiked its quarterly dividend by 12 percent to $0.28 a share.

Genesee Corp.'s shares also benefited from an increase in earnings. The company's announcement during the quarter that first-quarter earnings per share had increased $0.17 over the previous year to $1.55 resulted in investors bidding up Genesee's stock $1.25, or 3.7 percent, to a closing price of $35.25.

The gains made by the largest dollar-gainer in our index of brewers stocks were also fueled by earnings reports. Japanese brewer Kirin reported during the quarter that pre-tax profits for the first six months of the year were up 6.2 percent, despite a decrease in sales resulting from the sale of the company's soft drink division. For the three-month period, Kirin's stock gained $9.00 to close at $109.

Just as positive earnings make for strong stock prices, disappointing earnings can make for dismal stock prices, and during the third quarter, Coors learned this lesson well. The Colorado-based brewer reported second-quarter earnings of $0.43 a share, down 37 percent from the same period in 1990. Investors responded by selling off the stock to the tune of a $4.13, or 18.4-percent, drop to an ending price of $18.23. The drop made Coors the only stock in our index to fall in value during the third quarter.