Back to top

Image: Bigstock

Improving Depletions to Aid Boston Beer's (SAM) Q2 Earnings

Read MoreHide Full Article

The Boston Beer Company, Inc. (SAM - Free Report) is slated to report second-quarter 2018 results on Jul 26. The company has been witnessing positive trends due to its focus on reviving the Samuel Adams and Angry Orchard brands. Notably, the company’s recent launches including the Sam ’76, Samuel Adams New England IPA and Angry Orchard Rose brands, received a positive response from the customers, which helped improve shipments and depletions in the first quarter of 2018.

Boston Beer delivered a positive earnings surprise of 44.7% in the last reported quarter. A glimpse of the company’s earnings performance in the trailing four quarters shows that it has outpaced estimates by an average positive surprise of 41.8%. Additionally, the company’s surprise history reveals that it has delivered an earnings beat in five of the last six quarters and topped sales estimates consecutively in the last three quarters.

Although the Zacks Consensus Estimate of $2.77 per share for second-quarter 2018 has declined in the last seven days, the same reflects year-over-year growth of 17.9%.

Let’s find out what’s in store for Boston Beer in the upcoming second-quarter earnings release.

Things You Should Know

Boston Beer is advantageously positioned to capture a larger share in the craft beer space, given its robust craft beer portfolio. The company's continued focus on pricing and product innovation, and growth of non-beer categories, alongside brand development, is the key to driving operating performance and bolstering the market position.

The company banks on rising demand for new styles and flavors of craft beer as the vast Samuel Adams beer portfolio has a lot to offer to the consumers. Ongoing investments in breweries and tap rooms should further aid in recovering the shares lost due to rising competition. Additionally, innovation in non-beer categories, including hard teas, ciders and seltzer, has been a hit among liquor drinkers, which should drive depletions growth.

The company’s recent innovations in the Samuel Adams and Angry Orchard portfolios are driving shipments and depletions growth. Further, the company is looking to expand the distribution and customer base for the Twisted Tea brand as well as maintain the leadership position for the Truly Spiked & Sparkling brand in the emerging hard sparkling water category.

Depletions for the year-to-date period through the 15-week period, ended Apr 14, 2018, are estimated to have grown nearly 8% from the comparable year-ago period. For 2018, depletions and shipments are likely to range from flat to up 6%.

Notably, analysts surveyed by Zacks expect second-quarter revenues to be $275.5 million, up 4.1% year over year. Moreover, estimates for the shipment volume reflect an increase of 8.8% from the year-ago period.

Further, Boston Beer is also making strides to address industry challenges through improved cost structure and re-investing these savings for the brand development. In fact, this has been significantly contributing toward improving the gross margin. For 2018, Boston Beer expects the gross margin between 52% and 54%.

These factors have collectively contributed to the company’s solid run on the index. Boston Beer shares have surged 42.7% in the last three months, significantly outperforming the industry’s decline of 6%.



Though the entry of a horde of smaller craft brewers and increased options for drinkers has increased competition in the industry, we believe, Boston Beer is poised to steer through this situation. We remain optimistic about the company’s second-quarter results, given the optimism arising from its innovative product launches.

Zacks Model

Our proven model shows that Boston Beer is likely to beat earnings estimates because it has the right combination of two key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Boston Beer’s has an Earnings ESP of +13.00%. This, along with the company’s Zacks Rank #1, makes us reasonably confident of an earnings beat.

Other Stocks Likely to Deliver Earnings Beat

Here are some other companies that you may want to consider as our model shows that these, too, have the right combination of elements to post an earnings beat:

B&G Foods Inc. (BGS - Free Report) has an Earnings ESP of +1.58% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Monster Beverage Corporation (MNST - Free Report) has an Earnings ESP of +3.07% and a Zacks Rank of 3.

Brown-Forman Corporation (BF.B - Free Report) has an Earnings ESP of +0.52% and a Zacks Rank #3.

Today's Stocks From Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6% and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>

Published in