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What a difference a quarter makes, Index shows.

What a difference a quarter makes, Index shows

Thanks to a strong bull run in the fourth quarter of 1990, brewery stocks ended the year on an auspicious note, reversing disastrous third-quarter performance.

The fourth-quarter tonic: 1) consumers continued to embrace new brands of beer; 2) the perceived easing of Mideast tensions; 3) lower interest rates; and 4) sharply lower oil prices.

And no indicator felt the soothing benefits of the above events last quarter more than the Modern Brewery Age Stock Index. The box score for this index of six issues tracked in the accompanying chart: the MBA Index rose a stout 153 points to close the year at 2109.73.

In other words, each brewer in our financial barometer fashioned together an average gain of 7.8 percent, highlighting their bullish finish to 1990. In comparison, the Dow Jones Industrial Average mounted a 7.4-percent gain to conclude last year at 2633.66.

In the third quarter of 1990, the Modern Brewery Age Stock Index spiraled downward to the tune of 16.75 percent before cratering at 1957.20.

A sampling of last quarter's winners and losers in the beer industry includes:

* Anheuser-Busch garnered its share of "buy" orders last quarter, which in turn propelled the stock $5.50-per-share higher, or 14.7 percent, before it concluded matters at $43 a share. The reason: Wall Street was impressed with its 9.4-percent gain in third-quarter net income to $261 million from $238 million in the same period a year before. Moreover, Wall Street is looking for an earnings increase of anywhere between 11 and 23 percent for Anheuser-Busch during the fourth quarter ended December 31, 1990. Analysts are also expecting the company to report a six-percent rise in retail sales and 14-percent gain in shipments to wholesalers during that three-month period. Perhaps most importantly, Wall Street believes the brewery and food concern will perform well in the face of a recession, and has placed "buy" recommendations on the stock as a result.

* North of the border, Canadian brewers ended 1990 in bullish fashion, as both Molson and Labatt's posted strong numbers.

* Labatt's led the pack with a 12-percent gain en route to a close of $21 per share. The stock rebounded from a brutal beating in the third quarter when fears of a recession in Canada became a reality. The ensuing sell-off pushed Labatt down to a new 12-month low of $18.38 until last quarter's rebound fueled the stock higher.

* Molson (Class A) turned in a strong performance, gaining just over 11 percent to conclude 1990 at $32.75. Bolstered by strong results at its brewing division, Canada's oldest brewer posted an eight-percent increase in net income during the first half of 1990. Specifically, profits at Molson rose to $76 million million from $70 million in the year-earlier period. Sales, however, slipped five percent to $1.3 billion from $1.4 billion.

* The lone loser in trading last quarter was Coors, which back-tracked $3.63 a share, or just over 15 percent, to close at $20.50. The reason: the brewer posted third-quarter earnings that were below Wall Street's expectations. Coors' third-quarter bottom line: net income rose 12 percent to 63 cents per share, well below consensus estimates of 73 cents.
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Title Annotation:brewing industry's 1990 forth quarter stock earnings; Modern Brewery Age Stock Index
Publication:Modern Brewery Age
Date:Jan 21, 1991
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