Boston Beer Co. (SAM - Analyst Report) posts four
positive earnings surprises in a row and becomes a Zacks
#2 Rank (Buy). With Cinco de Mayo right around the corner, a cold
Sam Adams may find its way into an aggressive growth investors
hands near you!
The Boston Beer Company, Inc. makes and sells alcohol beverages.
The company sells approximately 50 beers under the Samuel Adams or
the Sam Adams brand names as well as a few other brands. The
Boston Beer Company, Inc. was founded in 1984 and is based in
Boston Beer Tops Earnings Estimates in Four Straight
Boston Beer has topped earnings estimates in each of the last four
quarters. The average beat over that same time frame has been
almost $0.03 or 30% ahead of the Zacks Consensus Estimate. Skewing
that average is the huge beat in the June 2011 quarter.
The June 2011 quarter saw the company miss on the topline,
reporting sales of $134 million, $4 million less than the Zacks
Consensus Estimate and EPS of $1.97, $0.80 ahead of the Zacks
Consensus Estimate of $1.17. That translates into a beat of more
than 68%. The stock, however, fell in the session following the
earnings report by more than 3%.
Over the four quarter positive surprise streak, the stock moved
the most following the September 2011 quarter. The company again
missed on the top line, but the miss was approximately $1 million
while the bottom line outperformed by 9%. Coming in $0.10 higher
than the Zacks Consensus Estimate helped push Boston Beer's stock
higher by nearly 12% following the release.
Boston Beer Most Recent Reported Earnings
On May 2, 2012 the company reported revenue of $113
million, roughly $2 million ahead of the Zacks Consensus Estimate
and up from $102 million reported in year ago quarter. In
addition, earnings per
share came in at $0.56, $0.16 higher than
the Zacks Consensus Estimate of $0.40. The beat of 40% was a
reacceleration of earnings that aggressive growth investors tend
to look for.
The valuation "pitcher" for Boston Beer is not as frothy as one
might expect given the recent history of solid positive earnings
surprises. A trailing PE multiple of 23x is just a little above
the industry average of 19.9x, while the forward PE has bubbled up
to 26x compared to a 17x industry average. The price to book
multiple, generally a more conservative measure, has Boston Beer
trading at 5x, just under the industry average of 5.3x. The
intoxicating metric is the price to sales, with the company
trading at 1.8x compared to a 3.2x industry average. Given the
recent solid execution, aggressive growth investors will likely
drink to this valuation.
The price and consensus chart for Boston Beer shows why this stock
is a Zacks #2 Rank (Buy) instead of a Zacks #1 Rank (strong Buy).
Throughout 2009 and 2010 the company brewed up some good earnings
and the stock moved higher as a result. Toward the end of 2010
the estimates started to come down for 2011 as shown in the blue
line and for future estimates as well. Those lower earnings
projects cause the stock to fall, but the company has since
returned to growing its earnings. Boston Beer is Zacks #2
Brian Bolan is the Aggressive Growth Stock Strategist
Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor
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