Shares of Boston Beer Company Inc. (NYSE:SAM) have displayed a spectacular show in the past year and emerged as an attractive investment option. Notably, the stock has gained a whopping 81.7% in a year against 19.2% decline recorded by the industry. The Beverages-Alcohol industry is witnessing a downturn due to softness in the beer category as consumers are shifting to healthier drinking options and wines.
We believe that there is momentum left in the stock of this Boston, MA-based alcohol company, backed by its vast non-beer portfolio — including the Twisted Tea, Truly Spiked & Sparkling, and Angry Orchard brands. These brands are witnessing an increased demand as a result of the switch-over from beer. Additionally, the progress on the company’s three-point growth plan — which is focused on cost savings, long-term innovation, and the revival of Samuel Adams and Angry Orchard brands — bodes well.
This is further evident from this Zacks Rank #3 (Hold) company’s long-term impressive earnings growth rate of 10% and a Growth Score of B.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Looking more closely at the stocks in the broader industry, we note that Boston Beer is quite ahead of the peer group. Notably, stocks such as Molson Coors Brewing Company (NYSE:TAP) , Constellation Brands (NYSE:STZ) and Anheuser-Busch InBev SA/NV (NYSE:BUD) have witnessed declines of 18.1%, 8% and 35.5%, respectively, in a year. Let’s delve deeper and find out reasons that are pushing Boston Beer ahead of its peers.
Driven by impressive quarterly results, management raised earnings guidance for 2018. Adjusted earnings per share are now envisioned to be $7.10-$7.70 in 2018 compared with $6.30-$7.30 expected earlier. Of the assumptions for the earnings view, the company raised its depletion and shipment forecast based on favorable trends witnessed so far. It now projects depletions and shipments to grow 12-15% compared with the prior guidance of 7-12%. The company also raised estimates for price increases per barrel to 1-2% versus 0-2% mentioned earlier.
Additionally, the company provided its initial guidance for 2019. It estimates depletion and shipment percentage increases between a high-single digit and low-double digits. Revenue per barrel is likely to increase 0-3%.
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