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Bear of the Day: Boston Beer Company (SAM)

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Although the craft beer market has seen incredible growth, the shine has started to come off some of the bigger names in this market. Take Boston Beer Company (SAM - Free Report) , the maker of Sam Adams, for example.

The company was a market darling for quite some time, and easily the face of the craft beer movement too. However, as more entrants have moved into the market, and as some have called into question if Boston Beer can still call itself a craft brewer, the growth rate for SAM has stalled out.

So, although it pains me—as someone born and raised in Massachusetts—to write up this bear of the day on Boston Beer Company (SAM - Free Report) , it is a clear candidate for this title thanks to some of its sluggish metrics in a number of important areas.

Recent Estimates

Although SAM demolished estimates in its most recent earnings report, the company still posted a huge EPS slump when compared to the year ago period. Additionally, revenues were also sharply lower on a year-over-year basis, while gross margins also struggled when compared to a year ago as well.

And although guidance was reasonable, analysts don’t seem to be buying SAM’s ability to deliver as of late. Instead, analysts have been slashing earnings estimates for SAM stock, pushing the near term trend lower for this brewer.

Estimates for the current year have fallen from $6.36/share down to $5.33/share for the current year in the past ninety days, while we have seen a similarly sluggish trend for the next year time frame too. But if that wasn’t enough, the most accurate estimate for SAM in this year is just $4.80/share, a level that is roughly 10% lower than the consensus estimate, and close to 25% lower than the consensus from 90 days ago.

No wonder SAM has fallen into Zacks Rank #5 (Strong Sell) territory, and why we are looking for more sluggish trading out of this company in the near term.

Other Choices

If you are looking for a better choice in the alcoholic beverage market, then Constellation Brands (STZ - Free Report) might be a stock with investigating further. The company has a Zacks Rank #1 (Strong Buy), while it is also growing earnings at a double digit percentage pace as well.

This could make STZ a better choice for investors over SAM these days, at least until Boston Beer Company can turn things around on the earnings estimate front.

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