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Boston Beer Focuses on Strategic Growth: Should You Hold?
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You must take a look at The Boston Beer Company, Inc. (SAM - Free Report) as it is progressing with strategic initiatives and expansion through acquisitions. Also, it commands a robust portfolio of globally recognized brands and is amongst the largest U.S. premium craft brewers. Notably, it yielded a return of 9.3% in the past six months, compared with the Zacks categorized Beverages-Alcoholic industry's fall of 7.7%.
Boston Beer also distributes its beverages in Canada, Europe, Israel, the Caribbean, the Pacific Rim, Mexico, and Central and South America, through a strong network of wholesale distributors. We expect the company’s continued focus on pricing, product innovation and brand development to boost its operational performance and position in the market.
Boston Beer is keen on expanding its business through inorganic means. It mainly focuses on acquiring assets which can fulfill its goal of enhancing the brewing capacity as well as expanding into new geographic regions. Also, the company remains committed to a three-point growth plan, focused on revival of its Samuel Adams and Angry Orchard brands, cost-saving initiatives and long-term innovation.
Going forward, management intends to add two new beers – Samuel Adams Hopscape and Samuel Adams Fresh as Helles. In addition, it is focused on making investments to revive its hard cider category and Angry Orchard brand, while maintaining category leadership. We expect these moves to enhance the company’s long-term profitability.
However, Boston Beer has been witnessing contraction in gross margin for three straight quarters now. In third-quarter 2016, the company’s gross margin shrank 90 basis points to 52.7%, attributable to an unfavorable product mix and fixed cost absorption.
Moreover, management lowered its earnings and depletions outlook for 2016. It now expects earnings per share in the band of $6.30–$6.70, compared with $6.40–$7.00 guided earlier. As a result, the Zacks Consensus Estimate of $6.34 and $6.40 for 2016 and 2017 declined 5 cents and 46 cents, respectively, over the past 60 days. Further, the Zacks Consensus Estimate for the fourth quarter has decreased 7 cents to $1.26 during this time frame.
Alongside, Boston Beer faces stiff competition from well-established players in the industry, such as Molson Coors Brewing Company (TAP - Free Report) and Anheuser-Busch InBev SA/NV (BUD - Free Report) . Looking ahead, the company anticipates competitive headwinds to intensify due to the increasing popularity of craft beer and entry of new players, which may dent its both its top and bottom lines.
Nonetheless, the company’s brand-building efforts and initiatives to add products to its portfolio, along with the acquisition of assets to expand geographically, are likely to help it gain a significant market share.
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>
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Boston Beer Focuses on Strategic Growth: Should You Hold?
You must take a look at The Boston Beer Company, Inc. (SAM - Free Report) as it is progressing with strategic initiatives and expansion through acquisitions. Also, it commands a robust portfolio of globally recognized brands and is amongst the largest U.S. premium craft brewers. Notably, it yielded a return of 9.3% in the past six months, compared with the Zacks categorized Beverages-Alcoholic industry's fall of 7.7%.
Boston Beer also distributes its beverages in Canada, Europe, Israel, the Caribbean, the Pacific Rim, Mexico, and Central and South America, through a strong network of wholesale distributors. We expect the company’s continued focus on pricing, product innovation and brand development to boost its operational performance and position in the market.
Boston Beer is keen on expanding its business through inorganic means. It mainly focuses on acquiring assets which can fulfill its goal of enhancing the brewing capacity as well as expanding into new geographic regions. Also, the company remains committed to a three-point growth plan, focused on revival of its Samuel Adams and Angry Orchard brands, cost-saving initiatives and long-term innovation.
Going forward, management intends to add two new beers – Samuel Adams Hopscape and Samuel Adams Fresh as Helles. In addition, it is focused on making investments to revive its hard cider category and Angry Orchard brand, while maintaining category leadership. We expect these moves to enhance the company’s long-term profitability.
However, Boston Beer has been witnessing contraction in gross margin for three straight quarters now. In third-quarter 2016, the company’s gross margin shrank 90 basis points to 52.7%, attributable to an unfavorable product mix and fixed cost absorption.
Moreover, management lowered its earnings and depletions outlook for 2016. It now expects earnings per share in the band of $6.30–$6.70, compared with $6.40–$7.00 guided earlier. As a result, the Zacks Consensus Estimate of $6.34 and $6.40 for 2016 and 2017 declined 5 cents and 46 cents, respectively, over the past 60 days. Further, the Zacks Consensus Estimate for the fourth quarter has decreased 7 cents to $1.26 during this time frame.
BOSTON BEER INC Price and Consensus
BOSTON BEER INC Price and Consensus | BOSTON BEER INC Quote
Alongside, Boston Beer faces stiff competition from well-established players in the industry, such as Molson Coors Brewing Company (TAP - Free Report) and Anheuser-Busch InBev SA/NV (BUD - Free Report) . Looking ahead, the company anticipates competitive headwinds to intensify due to the increasing popularity of craft beer and entry of new players, which may dent its both its top and bottom lines.
Nonetheless, the company’s brand-building efforts and initiatives to add products to its portfolio, along with the acquisition of assets to expand geographically, are likely to help it gain a significant market share.
Zacks Rank & a Key Pick
Boston Beer has a Zacks Rank #3 (Hold). A better-ranked stock in the same industry is Tsingtao Brewery Company Limited (TSGTY - Free Report) , which gained roughly 13% year to date and carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>