Breaking News

Boston Beer (SAM) Outpaces Peers: Surges 81.7% In A Year

By Zacks Investment ResearchStock MarketsNov 13, 2018 08:44PM ET
Boston Beer (SAM) Outpaces Peers: Surges 81.7% In A Year
By Zacks Investment Research   |  Nov 13, 2018 08:44PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

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.

Three-Point Growth Plan on Track

Boston Beer remains committed to the three-point growth plan focused on the revival of its Samuel Adams and Angry Orchard brands, cost-saving initiatives, and long-term innovation.

Firstly, the company plans to revive the Samuel Adams brand through packaging, innovation, promotion and brand communication initiatives. Further, it remains keen on retaining Angry Orchard and Twisted Tea’s momentum while ensuring Truly Spiked & Sparkling's leadership position in the hard sparkling-water category.

Secondly, the company is focused on accelerated cost savings and efficiency projects, with savings directed for further brand development. Based on opportunities in 2018 and 2019, it continues to anticipate improving gross margin by one percentage point every year through 2019. The company’s third priority is long-term innovation and maximizing shareholder value.

Depletions Growth — A Positive Trend

Boston Beer is witnessing sturdy depletions growth for a while now, which is aiding top-line performance. In third-quarter 2018, revenues improved 24.2% year over, driven by 23.5% improvement in shipment volumes and 18% depletions growth. Notably, depletion improvement reflects an accretion from 12% in the second quarter and 8% in the first quarter. Depletions growth was primarily attributed to major innovations, quality and strong brands alongside solid sales execution and support from distributors. Moreover, increases in Twisted Tea, Truly Spiked & Sparkling, and Angry Orchard brands aided growth, which was partially offset by fall in the Samuel Adams brand.

Depletions for the year-to-date period through 42 weeks ended on Oct 20, 2018, are estimated to have grown nearly 13% from the comparable year-ago period. The company’s non-beer portfolio is poised to deliver significant depletions growth in the future on the back of expansion of distribution and customer base for the Twisted Tea brand, success of the Angry Orchard Rose, and the Truly Spiked & Sparkling brand’s leadership position in the emerging hard sparkling-water category.

Robust Surprise Trend

The company displays solid top- and bottom-line trends, which continued in the third quarter of 2018. While the company surpassed earnings estimates in six out of the trailing eight quarters, it delivered positive sales surprise in four out of the last six quarters. Notably, earnings gained from higher revenues and lower income taxes in the third quarter. Further, top-line growth was primarily fueled by higher shipment volume and depletion growth.

The Boston Beer Company, Inc. Price, Consensus and EPS Surprise

The Boston Beer Company, Inc. Price, Consensus and EPS Surprise | The Boston Beer Company, Inc. Quote

Upbeat Outlook

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%.

3 Medical Stocks to Buy Now

The greatest discovery in this century of biology is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating revenue, and cures for a variety of deadly diseases are in the pipeline.

So are big potential profits for early investors. Zacks has released an updated Special Report that explains this breakthrough and names the best 3 stocks to ride it.

See them today for free >>

Molson Coors Brewing Company (TAP): Free Stock Analysis Report

The Boston Beer Company, Inc. (SAM): Free Stock Analysis Report

Anheuser-Busch InBev SA/NV (BUD): Free Stock Analysis Report

Constellation Brands Inc (STZ): Free Stock Analysis Report

Original post
Boston Beer (SAM) Outpaces Peers: Surges 81.7% In A Year
Boston Beer (SAM) Outpaces Peers: Surges 81.7% In A Year

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email