Category: SAM

SAM – Boston Beer CEO acknowledges Q2 hard seltzer sales miss – ‘we don't look very smart'

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Boston Beer CEO David Burwick said Friday the company was surprised by the disappointing second-quarter sales of its Truly hard seltzer, telling CNBC in an interview that management does not “look very smart” after its prior forecast.

“The trade-off from grocery and liquor store purchase and consuming at home to bars during that time period particularly as the summer hit is really what hit us,” Burwick said on “Closing Bell.” “And honestly, it hit us hard and fast. … We don’t look very smart by missing on that guidance.”

Shares of Boston Beer plummeted Friday, closing down 26% at $701 apiece, as Wall Street reacted negatively to the company’s worse-than-expected quarterly results released Thursday evening. Boston Beer reported earnings of $4.75 per share on $603 million in revenue, while analysts surveyed by Refinitiv were looking for $6.69 in earnings per share and $658 million in revenue. Lower-than-anticipated demand for Truly was a key culprit for the earnings miss.

Goldman Sachs said in a note to its clients Thursday that the second-quarter drop raised questions about the company’s long-term growth plans and ability to properly forecast its results, even though the hard seltzer category was expected to slow down in some capacity after its red-hot growth in recent years. Analyst Bonnie Herzog downgraded the stock to neutral from buy.

Boston Beer owns brands such as Samuel Adams, Twisted Tea, Truly Hard Seltzer, Angry Orchard Hard Cider and other local craft beer brands.

Burwick said the company felt “very confident” in the hard seltzer category going into mid-May and Memorial Day, with the unexpected plunge only becoming clear later on and into June as more Covid-related restrictions were eased.

“One of the things that’s going on here, that’s different than the March-April time period, was that the country is opening up in May and people were going out to bars and restaurants. Hard seltzer isn’t that well developed in those channels yet,” Burwick said, adding: “It will be and it’s getting there.”

However, the company did not make a pre-announcement to alert investors and analysts of worrisome sales developments, which the executive said may be a point of “learning for us going forward.”

Despite poor second-quarter numbers, Burwick believes hard seltzer is a category that will continue to grow — even though the category has certainly slowed down from its old triple-digit growth rate.

He believes that hard seltzer’s fall is actually a “positive signal for reopening” as people gravitate away from grocery stores and into bars, choosing draft beer over seltzers.

“We will gain share. The question is where the category goes. And you know, if anybody out there can give a better sense of that we’re all ears, but we can’t control it,” said Burwick, who has been the company’s president and CEO since 2018 and has served on its board since 2005.

Boston Beer’s Truly hard seltzer and Twisted Tea brands are still the two fastest growing brands in the hard seltzer category, Burwick said. He also said the company expects the category to consolidate in the future after many new brands jumped in, which would help Truly.

Overall, the company’s revenue rose 33% in the second quarter on a year-over-year basis.

“I don’t think there’s another publicly traded beverage company, [alcoholic] or not alc, that comes close to that kind of top-line growth,” Burwick said. “We manage the business for the long term and obviously not a great day for investors, but we’re going to be back,” he added. “In fact, we haven’t gone anywhere with the same company we were two days ago. We feel just as confident about our future.”

SAM – Why Boston Beer Stock Got Crushed Friday Morning

What happened

Sam Adams beer maker Boston Beer (NYSE:SAM) shocked investors last night with a quarterly earnings report that fell far short of expectations. The stock is getting slammed this morning as a result with shares down more than 26% as of 10:25 a.m. EDT.

So what

Boston Beer reported earnings per share of $4.75 for its second quarter of 2021, well below the analyst consensus estimate of $6.69. Revenue also came up short of expectations. The company blamed weaker sales of its popular Truly hard seltzer product, along with general softness in the beer industry. 

red arrow crashing through the floor implying stock crashing.

Image source: Getty Images.

Specifically, Boston Beer chairman and founder Jim Koch said headwinds for the hard seltzer category included market maturation, a “gradual transition” of the product moving from household purchases to on-premise consumption, and increased competitive offerings. 

Now what

The company’s Truly brand has been one of the market leaders in the category, along with privately held Mark Anthony Brands’ White Claw. But new competitors have also been entering the market, and some have deep pockets. 

Coca-Cola (NYSE:KO) has launched its Topo Chico hard seltzer product, inspired by its Topo Chico sparkling mineral water brand. In its recent second-quarter earnings call, Coca-Cola said its new hard seltzer is currently in 17 markets globally, and continues to expand. It also said it has awarded Molson Coors (NYSE:TAP) the right to produce and sell Topo Chico hard seltzer in the U.S. 

Boston Beer still reported 33% revenue growth for the quarter, compared to the prior-year period. But investors were counting on continued solid contributions from the fast growing hard seltzer category. The fact that it was much softer than even the company itself expected has analysts downgrading and shareholders selling today. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

SAM – Boston Beer (SAM) Lags Q2 Earnings and Revenue Estimates

Boston Beer (SAM Free Report) came out with quarterly earnings of $4.72 per share, missing the Zacks Consensus Estimate of $7 per share. This compares to earnings of $4.69 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of -32.57%. A quarter ago, it was expected that this brewer would post earnings of $2.39 per share when it actually produced earnings of $4.58, delivering a surprise of 91.63%.

Over the last four quarters, the company has surpassed consensus EPS estimates two times.

Boston Beer, which belongs to the Zacks Beverages – Alcohol industry, posted revenues of $602.81 million for the quarter ended June 2021, missing the Zacks Consensus Estimate by 7.41%. This compares to year-ago revenues of $452.14 million. The company has topped consensus revenue estimates two times over the last four quarters.

The sustainability of the stock’s immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management’s commentary on the earnings call.

Boston Beer shares have lost about 6.5% since the beginning of the year versus the S&P 500’s gain of 16%.

What’s Next for Boston Beer?

While Boston Beer has underperformed the market so far this year, the question that comes to investors’ minds is: what’s next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company’s earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for Boston Beer was unfavorable. While the magnitude and direction of estimate revisions could change following the company’s just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $7.80 on $654.47 million in revenues for the coming quarter and $23.54 on $2.43 billion in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Beverages – Alcohol is currently in the top 45% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

SAM – Buy SAM Stock Down 25% Before Q2 Earnings?

The Boston Beer Company, Inc. (SAM Free Report) has skyrocketed 475% in the past five years as Wall Street dove into the stock on the back of SAM’s growth within the booming hard seltzer market. The stock has tumbled since its Q1 release in April, as Wall Street sold overheated shares and questioned how much longer the seltzer craze will last.

Now let’s examine SAM ahead of its second quarter FY21 financial release on Thursday, July 22.

Hard Seltzer & Craft Beer

Boston Beer has been at the forefront of the American craft beer industry since the 1980s and its portfolio currently includes Samuel Adams, Dogfish Head Brewery, and other craft brands. SAM then launched Truly Hard Seltzer in 2016 and in doing so helped kickstart the biggest alcoholic beverage revolution since light beer.

Truly is one of two dominant players in the category at the moment, alongside White Claw—owned by Mike’s Hard Lemonade maker Mark Anthony Brands. Truly and hard seltzer’s massive expansion forced Anheuser-Busch InBev (BUD Free Report) , Molson Coors (TAP Free Report) , Constellation Brands (STZ Free Report) , and even Coca-Cola (KO Free Report) , under its Topo Chico brand, to enter the hard seltzer market.

Boston Beer’s revenue surged 15% in fiscal 2018, another 26% in FY19, and 39% last year. The last three years represented SAM’s strongest top-line growth since 2014.

In fact, Boston Beer had never posted 30% or stronger revenue growth since it went public in the late 1990s until 2020. And Truly “generated triple-digit volume growth in 2020 and grew its velocity and its market share sequentially despite other national, regional and local hard seltzer brands entering the category.”

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Image Source: Zacks Investment Research

Other Fundamentals

Boston Beer posted 65% sales growth in Q1, while its adjusted earnings skyrocketed. Despite the continued growth, SAM shares plummeted and Wall Street analysts lowered their EPS projections, as investors thought about the eventual slowdown of the seltzer market.

The stock has now fallen roughly 27% since right before its April 22 earnings release. SAM has slipped below both its 50-day and 200-day moving averages along the way. The stock did pop nearly 3% Monday amid the broader market pullback from its records to close regular hours at $951.50 a share.

Boston Beer currently sits below neutral RSI levels (50) at 42. And it’s trading over 40% below its year-long high and 20% under its median at 35X forward 12-month earnings. These factors could potentially provide Boston Beer shares runway if it impresses Wall Street Thursday.

Zacks estimates call for SAM’s first quarter revenue to climb another 43%, with adjusted EPS projected to pop 49%. Peeking ahead, Boston Beer’s FY21 revenue is projected to surge 39% from $1.74 billion to $2.41 and then climb 19% higher to reach $2.87 billion in 2022—it pulled in $996 million in FY18. At the bottom end, SAM’s adjusted earnings are projected to soar 60% and 21%, respectively.

Investors should also know that Boston Beer is a well-run and financially solid company, with no debt on its books at the moment. Plus, reports project the global hard seltzer market could reach $14.5 billion by 2027, expanding at a CAGR of over 16%. And the company has launched Truly Lemonade Hard Seltzer and Iced Tea Hard Seltzer. These efforts are part of Truly’s continued expansion within a highly competitive area.

Bottom Line

Boston Beer’s downward earnings revisions help it land a Zacks Rank #5 (Strong Sell) right now and it sits below key technical levels heading into its Q2 release. Investors should also note that SAM’s short interest was around 10.5%, as of the last reporting. Therefore, investors likely want to stay away from Boston Beer for now, or until it shows signs of a comeback.

SAM – Boston Beer's (SAM) Innovation and Expansion Plans on Track

The Boston Beer Company, Inc. (SAM Free Report) remains committed to innovation and product portfolio expansion to boost long-term growth. Its advancement in the non-beer categories including ciders and hard seltzer should continue to drive progress. The company is also focused on accelerated cost savings and efficiency projects to aid margins. We expect its intensified concentration on pricing, product innovation, growth of non-beer categories alongside brand-building efforts to reinforce its position in the market.

We note that Boston Beer has made successful innovations in craft beer, hard cider and hard iced tea categories over the years. The company has been witnessing robust trends for the Truly and Twisted Tea brands, which are driving depletions. In the first quarter of 2021, the company witnessed accelerated depletion growth for the Truly Hard Seltzer and Twisted Tea brands. In a latest development, the well-known craft brewer inked a long-term partnership deal with Beam Suntory, through which it looks to expand select iconic brands into some fastest-growing beverage alcohol segments.

More on Latest Partnership

Boston Beer’s collaboration with Beam Suntory will help grow its industry-leading Truly Hard Seltzer into bottled spirits, thus gaining from the latter’s distilling expertise and distribution network. Both companies also expect product launches including the Sauza tequila brand into ready-to-drink beverages (RTDs) by capitalizing on Boston Beer’s production capabilities and distribution footprint.

Management remains quite impressed with this recent alliance, which will help the company transition into the spirits category. This alliance will enable Boston Beer to offer customers more options while accomplishing its mission of serving high-quality products including the tequila brand.

Being a recognized premium spirits player and an RTD leader in Japan, Australia and Germany, Beam Suntory has brands like Jim Beam, Canadian Club and -196° in its kitty, and looks to strengthen its flourishing US RTD business. Boston Beer boasts a robust portfolio of brands like Dogfish Head beer, Samuel Adams, Twisted Tea Hard Iced Tea, Truly Hard Seltzer and Angry Orchard Hard Cider. These premium brands coupled with an extension in the spirits category through the latest tie-up are likely to deliver sustainable growth for Boston Beer.

What Else?

Shares of this presently Zacks Rank #5 (Strong Sell) player have decreased 29.2% against the industry’s 0.9% rise in the past three months. The downside can be attributed to the adverse impacts of the prevalent pandemic. The company has also been witnessing higher labor and safety-related costs at its breweries for a while now due to the ongoing economic uncertainties. It also continues to be affected by higher advertising, promotional and selling expenses as well as freight costs.

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Image Source: Zacks Investment Research

Nonetheless, Boston Beer’s sturdy shipments and depletion growth are steadily aiding its top and bottom-line performances. The company reported better-than-expected earnings and sales results for first-quarter 2021. Both metrics improved on a year-over-year basis. Its shipments surged 60.1% year over year in the quarter, led by actions to maintain adequate distributor inventory levels to buoy demand.

Depletions grew 48%, marking the 12th successive quarter of double-digit growth. Depletions for the fifteen-week period, having ended Apr 10, 2021, soared nearly 49% from the year-ago period’s level.

Key Picks in the Consumer Staples Space

Darling Ingredients (DAR Free Report) delivered an earnings surprise of 29.8% in the last four quarters, on average. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Molson Coors (TAP Free Report) delivered an earnings surprise of 63.8% in the trailing four quarters, on average. It currently has a Zacks Rank #2 (Buy).

Medifast (MED Free Report) delivered an earnings surprise of 12.7% in the trailing four quarters, on average. It has a Zacks Rank of 2, presently.

SAM – Boston Beer Earnings: 3 Trends to Watch

Shareholders of Boston Beer (NYSE:SAM) are in for a volatile trading week. The company behind the Sam Adams, Truly, and Twisted Tea franchises is all set to announce second-quarter results on July 22.

Shares have dropped from 2021 highs on worries about mounting competition in hard seltzer. The company faces rising costs and a potentially rocky transition as people shift alcohol consumption back toward on-premises channels like bars and restaurants.

With that big picture in mind, let’s look at three key trends to watch on Thursday for this booming business.

Friends drinking beer together at a bar.

Image source: Getty Images.

1. More market share wins

There has been a flood of activity in the hard seltzer category that powered Boston Beer’s market-beating growth lately. Constellation Brands is pouring cash into the niche, for example, and aiming to make its Corona product one of the top three brands.

It’s possible that this competition knocked Boston Beer off its game in the second quarter, but I wouldn’t bet on it. The company faced down these rivals through 2020 and still managed to gain market share. That success convinced executives to ramp up shipments in recent weeks to prepare for a potentially blockbuster summer for Truly and other brands, including Dogfish Head and Angry Orchard. Most investors are looking for sales to jump 47% in the second quarter, on top of last year’s 37% spike.

2. Risks to the business

It hasn’t been all good news for Boston Beer’s business, though. The Sam Adams craft beer franchise saw weak growth, and so did its wider restaurant and bar division in early 2021. It’s an open question as to how the overall portfolio will fare as people return to more-normal drinking patterns. But if Constellation Brands’ recent results are a good guide, then Boston Beer likely enjoyed a rebound in the restaurant and bar business even as retailer sales stayed strong.

Costs might be a bigger drag since Boston Beer still relies on third-party brewers to fulfill a lot of its volume needs. Input prices are rising on everything from labor to glass, too, adding pressure for the company to try to balance higher prices against its priority of soaking up market share.

Yet CEO Dave Burwick and his team will likely stress the temporary nature of this earnings crunch, which will disappear once production levels meet demand. Most investors are looking for earnings to reach $4.88 per share this quarter, and for Boston Beer to raise prices across its portfolio by as much as 3%.

3. The updated outlook

Any change to management’s 2021 outlook would attract lots of investor attention on Thursday. As it stands, that forecast calls for depletions (a measure of consumer sales) to jump between 40% and 50% this year. That wide projection reflects uncertainty around consumer demand swings, competition, and supply chain challenges.

Boston Beer won’t clear up all of these concerns on Thursday, but its latest results and updated outlook should help investors understand whether the business is on track for another year of market-leading growth. All signs support that bullish reading heading into this earnings announcement

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

SAM – Boston Beer to Research and Develop Cannabis Drinks

Talk about beverages with a kick.

On Friday, The Boston Beer Company (NYSE:SAM), best known for the Samuel Adams product line, announced it is to develop nonalcoholic cannabis drinks. To do so, it is opening what it terms a “cannabis beverage research hub” in Canada. Unlike in the U.S., the sale and consumption of marijuana there is fully legal at the federal level.

With the move, Boston Beer is attempting to get its foot in the door of what promises to be a popular product segment. Many consumers would like to imbibe cannabis in some way but are reluctant to experience the harshness of the traditional method — smoking. This is a major reason why the pot-laced comestibles market has exploded over the past few years.

Drinks containing marijuana leaves, next to a lighter and a marijuana cigarette in an ashtray.

Image source: Getty Images.

“Innovation is core to what we do,” Boston Beer quoted its CEO Dave Burwick as saying. “We believe non-alcoholic cannabis beverages could represent a new frontier of innovation and want to be ready for future opportunities in the U.S.”

As with any marijuana product, selling in the U.S. market is tricky. Less than half of American states have legalized recreational marijuana, so the customer base for a major producer of any pot product is limited and scattershot.

Nevertheless, several prominent Democratic lawmakers have indicated they will soon push for federal decriminalization of the drug. So it’s encouraging that Boston Beer is making its move in advance of this hoped-for nationwide liberalization.

Boston Beer did not provide details of its cannabis drink initiative, including potential partners on the venture or the amount of the investment the company is making into it.

But investors clearly like the idea of weed drinks next to Sam Adams in their local supermarket or convenience store. On Friday, the company’s stock rose by nearly 3.9%, beating the S&P 500 index’s 1.5% rise.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

SAM – Why Boston Beer Stock Bounced Friday

What happened

Shares of craft brewer Boston Beer (NYSE:SAM) popped in the premarket, and initially traded up 8% Friday morning after the maker of Sam Adams beer reported first-quarter earnings Thursday evening. As of 9:45 a.m. EDT, the stock had pared some of those gains, trading almost 3% above yesterday’s closing price.

So what

Boston Beer reported earnings of $5.26 per share, blowing past the mean analyst estimate of $2.61 per share. Net revenue of $545 million also soared past estimates and grew 65% from the year-ago period. Much of the credit for the successful quarter can be attributed to the continued success of the company’s Truly Hard Seltzer and Twisted Tea brands. 

A group of people clinks glasses at a restaurant.

Image source: Getty Images.

The strength in the hard seltzer and iced tea brands was partially offset by declines in sales of its Samuel Adams and Dogfish Head beer brands, as well as Angry Orchard hard cider. 

Now what

Boston Beer continues to lead the growth in popularity of hard seltzers. The company recently launched Truly Iced Tea Hard Seltzer, which it said has helped the Truly brand double sales since last year. Boston Beer president and CEO Dave Burwick said in the earnings release that the Truly brand outgrew the overall hard seltzer category, giving the brand a market share of over 28%. 

There is new competition in the segment, however. Coca-Cola (NYSE:KO) has launched a hard seltzer product line inspired by its Topo Chico sparkling mineral water brand. Topo Chico Hard Seltzer has been expanding in Latin America and Europe, and was recently launched in some key U.S. markets. Investors in Boston Beer would be smart to monitor whether Truly’s market share is affected by the new offering going forward.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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