We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Here's Why Boston Beer (SAM) Rallies Despite a Dismal Q4
Read MoreHide Full Article
The Boston Beer Company, Inc. (SAM - Free Report) stock continues its bull run despite reporting a softer-than-anticipated fourth-quarter fiscal 2018. The upside story mainly relates to the company’s commitment toward its three-point growth plan focused on revival of Samuel Adams and Angry Orchard brands, cost-saving initiatives and long-term innovation. Consequently, shares of Boston Beer have rallied 8.8% in the past month, outperforming the industry’s gain of 3.1%.
That said, let’s find out more about the growth drivers for this Zacks Rank #3 (Hold) stock.
Strategic Initiatives –— A Key Growth Driver
Boston Beer looks well-poised to drive long-term growth through the execution of the aforementioned three-point growth plan. Firstly, this plan prioritizes the revival of the Samuel Adams and Angry Orchard brands via packaging, innovation, promotion and brand communication initiatives. The company is encouraged by the recently launched new-media campaigns for the Samuel Adams and Angry Orchard brands. It remains optimistic about other innovative product launches like Sam '76, Samuel Adams New England IPA and Angry Orchard Rose. It also targets to retain momentum for the Twisted Tea brand and to gain leadership for Truly Spiked & Sparkling brand in the hard sparkling water category.
Secondly, the company has accelerated its focus on cost savings and efficiency projects with these savings directed for further brand development. This aided gross margin improvement in fourth-quarter 2017. Based on current opportunities, it continues to anticipate improving gross margin by one percentage point every year through 2019.
Finally, the plan emphasizes long-term innovation and maximizing the shareholder value. Boston Beer remains optimistic about the craft beer and cider categories in the future.
Gross Margin Growth to Boost Bottom Line
Boston Beer is making strides to address industry challenges through improved cost structure and re-investing these savings for brand development. This has been significantly contributing toward an improving gross margin. In 2017, its cost savings and efficiency projects delivered above the targeted ranges, providing increased flexibility to invest in brands and positioning it well for 2018.
Gross margin improved 330 basis points (bps) in the fourth quarter driven by better pricing, product and package mix as well as cost-savings gains from the company-owned breweries. For 2018, it expects gross margins between 52% and 54%, which are likely to increase over the course of the year, driven by continued progress on cost-saving initiatives. This, along with lower operating expenses, should aid the bottom line.
Depletion Trends Show Improvement
Depletions continued to be soft in both the fourth quarter and full-year 2017, reflecting a decline of 10% and 7%, respectively. Depletion volumes were impacted by the loss of a week’s depletions and persistent decline in the Samuel Adams and Angry Orchard brands, partly mitigated by growth in Twisted Tea and Truly Spiked & Sparkling brands. Though still negative, the company’s quarterly depletion trends have been improving since the first quarter of 2017.
Additionally, we are encouraged by a strong start in 2018. Notably, depletions for the year-to-date period through the six-week period ended Feb 10, 2018, are estimated to have grown nearly 6% from the comparable year-ago period. For 2018, depletions and shipments are likely to range from flat to up 6%.
Lower Earnings & Sales Remain a Deterrent
Though the company’s long-term prospects look good, it reported lower-than-expected results in fourth-quarter 2017 with the top and bottom lines missing estimates. This marked a sales lag after two consecutive beats. Further, sales declined year over year, owing to a fall in shipment volumes and lower depletions. Volume declines in the quarter resulted from continued challenges at the Samuel Adams brand as well as the fall in the cider category and the Angry Orchard brand.
The Boston Beer Company, Inc. Price, Consensus and EPS Surprise
While the company anticipates depletions and shipments in the range of flat to up 6%, there remains some uncertainty in the volume outlook for 2018, which is expected to be more sensitive to innovations than previous years. Moreover, industry-wide challenges related to general softening of the craft beer and hard cider categories, increased entry of start-up brewers, and the rising number of options to drinkers is likely to hurt the top- and bottom-line results.
Do Beverages-Alcohol Stocks Grab Your Attention? Check These
Some better-ranked stocks in the same industry are Diageo plc (DEO - Free Report) , Campri Group and Heineken NV (HEINY - Free Report) .
Campri Group carries a Zacks Rank #2. The stock has a long-term EPS growth rate of 7.5%.
Heineken, also a Zacks Rank #2 stock, has a long-term earnings growth rate of 8.4%.
Can Hackers Put Money INTO Your Portfolio?
Earlier this month, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.
Image: Bigstock
Here's Why Boston Beer (SAM) Rallies Despite a Dismal Q4
The Boston Beer Company, Inc. (SAM - Free Report) stock continues its bull run despite reporting a softer-than-anticipated fourth-quarter fiscal 2018. The upside story mainly relates to the company’s commitment toward its three-point growth plan focused on revival of Samuel Adams and Angry Orchard brands, cost-saving initiatives and long-term innovation. Consequently, shares of Boston Beer have rallied 8.8% in the past month, outperforming the industry’s gain of 3.1%.
That said, let’s find out more about the growth drivers for this Zacks Rank #3 (Hold) stock.
Strategic Initiatives –— A Key Growth Driver
Boston Beer looks well-poised to drive long-term growth through the execution of the aforementioned three-point growth plan. Firstly, this plan prioritizes the revival of the Samuel Adams and Angry Orchard brands via packaging, innovation, promotion and brand communication initiatives. The company is encouraged by the recently launched new-media campaigns for the Samuel Adams and Angry Orchard brands. It remains optimistic about other innovative product launches like Sam '76, Samuel Adams New England IPA and Angry Orchard Rose. It also targets to retain momentum for the Twisted Tea brand and to gain leadership for Truly Spiked & Sparkling brand in the hard sparkling water category.
Secondly, the company has accelerated its focus on cost savings and efficiency projects with these savings directed for further brand development. This aided gross margin improvement in fourth-quarter 2017. Based on current opportunities, it continues to anticipate improving gross margin by one percentage point every year through 2019.
Finally, the plan emphasizes long-term innovation and maximizing the shareholder value. Boston Beer remains optimistic about the craft beer and cider categories in the future.
Gross Margin Growth to Boost Bottom Line
Boston Beer is making strides to address industry challenges through improved cost structure and re-investing these savings for brand development. This has been significantly contributing toward an improving gross margin. In 2017, its cost savings and efficiency projects delivered above the targeted ranges, providing increased flexibility to invest in brands and positioning it well for 2018.
Gross margin improved 330 basis points (bps) in the fourth quarter driven by better pricing, product and package mix as well as cost-savings gains from the company-owned breweries. For 2018, it expects gross margins between 52% and 54%, which are likely to increase over the course of the year, driven by continued progress on cost-saving initiatives. This, along with lower operating expenses, should aid the bottom line.
Depletion Trends Show Improvement
Depletions continued to be soft in both the fourth quarter and full-year 2017, reflecting a decline of 10% and 7%, respectively. Depletion volumes were impacted by the loss of a week’s depletions and persistent decline in the Samuel Adams and Angry Orchard brands, partly mitigated by growth in Twisted Tea and Truly Spiked & Sparkling brands. Though still negative, the company’s quarterly depletion trends have been improving since the first quarter of 2017.
Additionally, we are encouraged by a strong start in 2018. Notably, depletions for the year-to-date period through the six-week period ended Feb 10, 2018, are estimated to have grown nearly 6% from the comparable year-ago period. For 2018, depletions and shipments are likely to range from flat to up 6%.
Lower Earnings & Sales Remain a Deterrent
Though the company’s long-term prospects look good, it reported lower-than-expected results in fourth-quarter 2017 with the top and bottom lines missing estimates. This marked a sales lag after two consecutive beats. Further, sales declined year over year, owing to a fall in shipment volumes and lower depletions. Volume declines in the quarter resulted from continued challenges at the Samuel Adams brand as well as the fall in the cider category and the Angry Orchard brand.
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
While the company anticipates depletions and shipments in the range of flat to up 6%, there remains some uncertainty in the volume outlook for 2018, which is expected to be more sensitive to innovations than previous years. Moreover, industry-wide challenges related to general softening of the craft beer and hard cider categories, increased entry of start-up brewers, and the rising number of options to drinkers is likely to hurt the top- and bottom-line results.
Do Beverages-Alcohol Stocks Grab Your Attention? Check These
Some better-ranked stocks in the same industry are Diageo plc (DEO - Free Report) , Campri Group and Heineken NV (HEINY - Free Report) .
Diageo has a long-term earnings growth rate of 7.4% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Campri Group carries a Zacks Rank #2. The stock has a long-term EPS growth rate of 7.5%.
Heineken, also a Zacks Rank #2 stock, has a long-term earnings growth rate of 8.4%.
Can Hackers Put Money INTO Your Portfolio?
Earlier this month, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.
Download the new report now>>