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The Boston Beer Company is one of the founding fathers of the craft beer era and the growth of Samuel Adams helped it go public in the mid-1990s. These day’s Boston Beer is benefitting from a different drinking revolution: The explosion of hard seltzer. SAM shares have surged roughly 50% in 2020 and its growth outlook is impressive.
Seltzer Boom
Boston Beer’s expanded portfolio includes Orchard Hard Cider and Twisted Tea. The firm also completed its acquisition of fellow well-known craft beer maker Dogfish Head Brewery in July 2019. Perhaps most importantly, SAM rolled out Truly Hard Seltzer in April 2016.
The category has exploded since then, and Truly currently remains the No. 2 player in the space, behind only White Claw—owned by Mike's Hard Lemonade maker Mark Anthony Brands. Both firms got to market around the same time and have firmly established themselves far ahead of Anheuser-Busch InBev’s various seltzer offerings, as well as newer drinks from Corona and major industry powers.
The company’s founder Jim Koch has called hard seltzer “really once in a generation,” noting that “there hasn't been anything like this that’s got to scale so fast since light beer 40 years ago.”
In the first quarter of 2020, Boston Beer’s total sales jumped 31%, after its top-line climbed by 34% in Q4. “Truly has accelerated its velocity and has maintained its market share, while other national hard seltzer brands have ceded share,” CEO David Burwick said on its earnings call in April.
SAM has also rolled out Truly Lemonade. On top of that, the hard seltzer has a multiyear U.S. partnership with the NHL, a national ad campaign, and successfully sponsored popular youth-focused outlets such as Barstool Sports. And SAM’s hard seltzer compares favorably against White Claw in some key categories. “Truly has higher income households, younger buyers, more diverse ethnically buying households, more sourcing from wines and spirits,” Burwick said on its Q1 earnings call.
The nearby chart also shows that Boston Beer’s sales have surged over the last several years, after dipping by around 5% in 2017 and 2016. SAM’s 2018 revenue jumped over 15%, with FY19 up 26%. Plus, its posted three quarters of 30% or higher growth in three out of the last five periods.
Outlook
Moving on, our current Zacks estimate calls for Boston Beer’s Q2 sales to jump 32%, with the third quarter projected to come in 27% higher. Peeking further out, SAM’s fiscal 2020 revenue is projected to climb 26% to hit $1.57 billion, with FY21 expected to surge 15% above that.
At the bottom end of the income statement, Boston Beer’s adjusted Q2 earnings are expected to dip by 3.4% to $2.26 per share. Investors should note that its bottom-line has been hurt by “significantly reduced keg demand from the on-premise channel and higher labor and safety related costs” at its breweries.
That said, its adjusted fiscal 2020 EPS figure is still projected to pop 9%, with FY21 expected to soar 36% above that. On top of that, SAM’s earnings revisions have climbed, with its fiscal 2020 consensus up 18% and its 2021 estimate up 10.3% over past 60 days. This is no easy task in the current environment.
Bottom Line
Boston Beer’s positive earnings revision trends help it grab a Zacks Rank #1 (Strong Buy) right now, alongside its “A” grades for Growth and Momentum in our Style Scores system. SAM is also part of an industry that rests in the top 13% of our more than 250 Zacks industries.
Investors might want to consider SAM stock as a near-term coronavirus play, with alcohol sales up during the stay-at-home push. Boston Beer is also ready to expand within a booming category that it helped found. And SAM stock has cooled off a bit recently, which might give it room to jump again when it reports its Q2 results later in July.
Golden Entertainment shares have been in a downward trend for two years, and then the coronavirus forced its casinos and neighborhood bars to close. The U.S. economy is starting to return to something close to normal, but Golden’s outlook remains rough.
What’s Going On?
Golden Entertainment owns ten total casino resorts, most of which are in Nevada. GDEN is also one of the largest distributed gaming operators in the U.S., running “more than 10,500 gaming devices across Nevada and Montana." On top of that, the company’s portfolio includes 60 neighborhood pubs and taverns across Nevada.
Golden’s top-line had grown at a solid pace over the last several years, as it expanded its reach. Unfortunately, Wall Street’s admiration didn’t follow as its bottom-line performance underwhelmed. And now its core business has taken a massive hit as the coronavirus forced businesses deemed non-essential to close all over the country starting in mid-March. Things have started to return to normal and many restaurants and casinos have slowly reopened their doors in some capacity. However, coronavirus cases continue to spike in parts of the U.S.
GDEN’s Q1 fiscal 2020 sales fell nearly 14% for the period ended on March 31, which only included a few weeks of the shutdown. The company also reported a far worse-than-projected adjusted quarterly loss. This marked its fourth straight bottom-line miss and its fourth straight adjusted loss. “The COVID-19 pandemic forced the mandated closure of all our operations beginning in mid-March, and continues to have an unprecedented impact on our business and the gaming and entertainment industry in general,” CEO Blake Sartini said in prepared remarks.
Outlook
Clearly, the pandemic is totally out of Golden’s control. Nonetheless, the company’s second quarter sales are projected to plummet 79%, or nearly $200 million from the year-ago period to $53.2 million, based on our Zacks estimates. GDEN’s Q3 sales are then expected to sink 38% to push its full-year fiscal 2020 revenue down by over 38%.
On the bottom end of the income statement, Golden is expected to plummet from an adjusted loss of -$0.10 a share in Q2 FY19 all the way to -$1.90 this quarter. And its fiscal 2020 EPS figure is projected to sink to -$5.04 from last year’s -$1.43.
Bottom Line
The nearby chart shows investors just how much worse Golden’s earnings outlook as turned recently, due to no fault of its own. Still, GDEN is currently a Zacks Rank #5 (Strong Sell). And investors thinking about taking a chance on beaten-down casino and entertainment stocks might want to wait to see how the next few weeks play out.
Additional content:
Nasdaq Closes Week at Fresh All-Time Highs
Going into the final close for this holiday-shortened week ahead of the 4th of July, all major U.S. indexes wound up once again in the green: the Nasdaq led the way, +0.52%, the S&P 500 gained 0.45%, the Dow rose 0.36% and the small-cap Russell 2000 +0.32%.
Admittedly these are not blockbuster figures, and trading did turn tepid in the final hours of Thursday’s session, but the Dow, Nasdaq and S&P were all up for the week. The Nasdaq closes the week at a new all-time high of 10,207.63.
In fact, the Nasdaq has put up its best week since early May, and is on another 4-day winning streak, alongside the S&P 500. The Nasdaq was once again led by the index’s all-star listing Tesla, up another 7.8% today and 101% over the past three months. Tesla, as reported this morning, was well ahead on Q2 deliveries, with demand for its fleet of electric vehicles hotter than ever.
But investors grew a little cautious going into the final bell, with a long weekend ahead and more data and news items ready for us on Monday morning. Cases of COVID-19 remain at a record pace going into the weekend, and with Independence Day celebrations likely to bring people together all around the country — many of whom are adamant in their stance to not wear a protective face mask or keep social distancing practices — we may yet see another leg up in the amount of cases.
Another reason for finding caution in the markets Thursday afternoon is the valuation of certain sectors in the marketplace, particularly tech. Growth stocks like Zoom Video and stocks within industries under fire like Marriott Vacations all sport extraordinarily high P/E valuations. And with Q2 earnings season around the corner (more like a week from Monday), these valuations may not be sustainable once earnings reports start hitting the tape.
Nevertheless, as reported here last week, bullishness continues to prevail in the market. And as long as there is a real appetite to buy-buy-buy, only something drastic and dire would likely break this stride. Clearly, nothing of the sort showed up in economic data last week.
Free Book: Finding #1 Stocks
In this 300-page hardcover, Zacks' Executive VP Kevin Matras reveals almost every stock-picking secret he’s learned from the system that since 1988 has more than doubled the average yearly gain of the S&P 500.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Boston Beer Company, Golden Entertainment, Tesla, Zoom Video and Marriott Vacations highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – July 6, 2020 – Zacks Equity Research Shares of Boston Beer Company (SAM - Free Report) as the Bull of the Day, Golden Entertainment (GDEN - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Tesla (TSLA - Free Report) , Zoom Video (ZM - Free Report) and Marriott Vacations (VAC - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
The Boston Beer Company is one of the founding fathers of the craft beer era and the growth of Samuel Adams helped it go public in the mid-1990s. These day’s Boston Beer is benefitting from a different drinking revolution: The explosion of hard seltzer. SAM shares have surged roughly 50% in 2020 and its growth outlook is impressive.
Seltzer Boom
Boston Beer’s expanded portfolio includes Orchard Hard Cider and Twisted Tea. The firm also completed its acquisition of fellow well-known craft beer maker Dogfish Head Brewery in July 2019. Perhaps most importantly, SAM rolled out Truly Hard Seltzer in April 2016.
The category has exploded since then, and Truly currently remains the No. 2 player in the space, behind only White Claw—owned by Mike's Hard Lemonade maker Mark Anthony Brands. Both firms got to market around the same time and have firmly established themselves far ahead of Anheuser-Busch InBev’s various seltzer offerings, as well as newer drinks from Corona and major industry powers.
The company’s founder Jim Koch has called hard seltzer “really once in a generation,” noting that “there hasn't been anything like this that’s got to scale so fast since light beer 40 years ago.”
In the first quarter of 2020, Boston Beer’s total sales jumped 31%, after its top-line climbed by 34% in Q4. “Truly has accelerated its velocity and has maintained its market share, while other national hard seltzer brands have ceded share,” CEO David Burwick said on its earnings call in April.
SAM has also rolled out Truly Lemonade. On top of that, the hard seltzer has a multiyear U.S. partnership with the NHL, a national ad campaign, and successfully sponsored popular youth-focused outlets such as Barstool Sports. And SAM’s hard seltzer compares favorably against White Claw in some key categories. “Truly has higher income households, younger buyers, more diverse ethnically buying households, more sourcing from wines and spirits,” Burwick said on its Q1 earnings call.
The nearby chart also shows that Boston Beer’s sales have surged over the last several years, after dipping by around 5% in 2017 and 2016. SAM’s 2018 revenue jumped over 15%, with FY19 up 26%. Plus, its posted three quarters of 30% or higher growth in three out of the last five periods.
Outlook
Moving on, our current Zacks estimate calls for Boston Beer’s Q2 sales to jump 32%, with the third quarter projected to come in 27% higher. Peeking further out, SAM’s fiscal 2020 revenue is projected to climb 26% to hit $1.57 billion, with FY21 expected to surge 15% above that.
At the bottom end of the income statement, Boston Beer’s adjusted Q2 earnings are expected to dip by 3.4% to $2.26 per share. Investors should note that its bottom-line has been hurt by “significantly reduced keg demand from the on-premise channel and higher labor and safety related costs” at its breweries.
That said, its adjusted fiscal 2020 EPS figure is still projected to pop 9%, with FY21 expected to soar 36% above that. On top of that, SAM’s earnings revisions have climbed, with its fiscal 2020 consensus up 18% and its 2021 estimate up 10.3% over past 60 days. This is no easy task in the current environment.
Bottom Line
Boston Beer’s positive earnings revision trends help it grab a Zacks Rank #1 (Strong Buy) right now, alongside its “A” grades for Growth and Momentum in our Style Scores system. SAM is also part of an industry that rests in the top 13% of our more than 250 Zacks industries.
Investors might want to consider SAM stock as a near-term coronavirus play, with alcohol sales up during the stay-at-home push. Boston Beer is also ready to expand within a booming category that it helped found. And SAM stock has cooled off a bit recently, which might give it room to jump again when it reports its Q2 results later in July.
Bear of the Day:
Golden Entertainment shares have been in a downward trend for two years, and then the coronavirus forced its casinos and neighborhood bars to close. The U.S. economy is starting to return to something close to normal, but Golden’s outlook remains rough.
What’s Going On?
Golden Entertainment owns ten total casino resorts, most of which are in Nevada. GDEN is also one of the largest distributed gaming operators in the U.S., running “more than 10,500 gaming devices across Nevada and Montana." On top of that, the company’s portfolio includes 60 neighborhood pubs and taverns across Nevada.
Golden’s top-line had grown at a solid pace over the last several years, as it expanded its reach. Unfortunately, Wall Street’s admiration didn’t follow as its bottom-line performance underwhelmed. And now its core business has taken a massive hit as the coronavirus forced businesses deemed non-essential to close all over the country starting in mid-March. Things have started to return to normal and many restaurants and casinos have slowly reopened their doors in some capacity. However, coronavirus cases continue to spike in parts of the U.S.
GDEN’s Q1 fiscal 2020 sales fell nearly 14% for the period ended on March 31, which only included a few weeks of the shutdown. The company also reported a far worse-than-projected adjusted quarterly loss. This marked its fourth straight bottom-line miss and its fourth straight adjusted loss. “The COVID-19 pandemic forced the mandated closure of all our operations beginning in mid-March, and continues to have an unprecedented impact on our business and the gaming and entertainment industry in general,” CEO Blake Sartini said in prepared remarks.
Outlook
Clearly, the pandemic is totally out of Golden’s control. Nonetheless, the company’s second quarter sales are projected to plummet 79%, or nearly $200 million from the year-ago period to $53.2 million, based on our Zacks estimates. GDEN’s Q3 sales are then expected to sink 38% to push its full-year fiscal 2020 revenue down by over 38%.
On the bottom end of the income statement, Golden is expected to plummet from an adjusted loss of -$0.10 a share in Q2 FY19 all the way to -$1.90 this quarter. And its fiscal 2020 EPS figure is projected to sink to -$5.04 from last year’s -$1.43.
Bottom Line
The nearby chart shows investors just how much worse Golden’s earnings outlook as turned recently, due to no fault of its own. Still, GDEN is currently a Zacks Rank #5 (Strong Sell). And investors thinking about taking a chance on beaten-down casino and entertainment stocks might want to wait to see how the next few weeks play out.
Additional content:
Nasdaq Closes Week at Fresh All-Time Highs
Going into the final close for this holiday-shortened week ahead of the 4th of July, all major U.S. indexes wound up once again in the green: the Nasdaq led the way, +0.52%, the S&P 500 gained 0.45%, the Dow rose 0.36% and the small-cap Russell 2000 +0.32%.
Admittedly these are not blockbuster figures, and trading did turn tepid in the final hours of Thursday’s session, but the Dow, Nasdaq and S&P were all up for the week. The Nasdaq closes the week at a new all-time high of 10,207.63.
In fact, the Nasdaq has put up its best week since early May, and is on another 4-day winning streak, alongside the S&P 500. The Nasdaq was once again led by the index’s all-star listing Tesla, up another 7.8% today and 101% over the past three months. Tesla, as reported this morning, was well ahead on Q2 deliveries, with demand for its fleet of electric vehicles hotter than ever.
But investors grew a little cautious going into the final bell, with a long weekend ahead and more data and news items ready for us on Monday morning. Cases of COVID-19 remain at a record pace going into the weekend, and with Independence Day celebrations likely to bring people together all around the country — many of whom are adamant in their stance to not wear a protective face mask or keep social distancing practices — we may yet see another leg up in the amount of cases.
Another reason for finding caution in the markets Thursday afternoon is the valuation of certain sectors in the marketplace, particularly tech. Growth stocks like Zoom Video and stocks within industries under fire like Marriott Vacations all sport extraordinarily high P/E valuations. And with Q2 earnings season around the corner (more like a week from Monday), these valuations may not be sustainable once earnings reports start hitting the tape.
Nevertheless, as reported here last week, bullishness continues to prevail in the market. And as long as there is a real appetite to buy-buy-buy, only something drastic and dire would likely break this stride. Clearly, nothing of the sort showed up in economic data last week.
Free Book: Finding #1 Stocks
In this 300-page hardcover, Zacks' Executive VP Kevin Matras reveals almost every stock-picking secret he’s learned from the system that since 1988 has more than doubled the average yearly gain of the S&P 500.
Learn more now >>
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.