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Boston Beer (SAM) Outpaces Peers: Surges 81.7% in a Year
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Shares of Boston Beer Company Inc. (SAM - Free Report) have displayed a spectacular show in the past year and emerged as an attractive investment option. Notably, the stock has gained a whopping 81.7% in a year against 19.2% decline recorded by the industry. The Beverages-Alcohol industry is witnessing a downturn due to softness in the beer category as consumers are shifting to healthier drinking options and wines.
We believe that there is momentum left in the stock of this Boston, MA-based alcohol company, backed by its vast non-beer portfolio — including the Twisted Tea, Truly Spiked & Sparkling, and Angry Orchard brands. These brands are witnessing an increased demand as a result of the switch-over from beer. Additionally, the progress on the company’s three-point growth plan — which is focused on cost savings, long-term innovation, and the revival of Samuel Adams and Angry Orchard brands — bodes well.
This is further evident from this Zacks Rank #3 (Hold) company’s long-term impressive earnings growth rate of 10% and a Growth Score of B.
Looking more closely at the stocks in the broader industry, we note that Boston Beer is quite ahead of the peer group. Notably, stocks such as Molson Coors Brewing Company (TAP - Free Report) , Constellation Brands (STZ - Free Report) and Anheuser-Busch InBev SA/NV (BUD - Free Report) have witnessed declines of 18.1%, 8% and 35.5%, respectively, in a year. Let’s delve deeper and find out reasons that are pushing Boston Beer ahead of its peers.
Three-Point Growth Plan on Track
Boston Beer remains committed to the three-point growth plan focused on the revival of its Samuel Adams and Angry Orchard brands, cost-saving initiatives, and long-term innovation.
Firstly, the company plans to revive the Samuel Adams brand through packaging, innovation, promotion and brand communication initiatives. Further, it remains keen on retaining Angry Orchard and Twisted Tea’s momentum while ensuring Truly Spiked & Sparkling's leadership position in the hard sparkling-water category.
Secondly, the company is focused on accelerated cost savings and efficiency projects, with savings directed for further brand development. Based on opportunities in 2018 and 2019, it continues to anticipate improving gross margin by one percentage point every year through 2019. The company’s third priority is long-term innovation and maximizing shareholder value.
Depletions Growth — A Positive Trend
Boston Beer is witnessing sturdy depletions growth for a while now, which is aiding top-line performance. In third-quarter 2018, revenues improved 24.2% year over, driven by 23.5% improvement in shipment volumes and 18% depletions growth. Notably, depletion improvement reflects an accretion from 12% in the second quarter and 8% in the first quarter. Depletions growth was primarily attributed to major innovations, quality and strong brands alongside solid sales execution and support from distributors. Moreover, increases in Twisted Tea, Truly Spiked & Sparkling, and Angry Orchard brands aided growth, which was partially offset by fall in the Samuel Adams brand.
Depletions for the year-to-date period through 42 weeks ended on Oct 20, 2018, are estimated to have grown nearly 13% from the comparable year-ago period. The company’s non-beer portfolio is poised to deliver significant depletions growth in the future on the back of expansion of distribution and customer base for the Twisted Tea brand, success of the Angry Orchard Rose, and the Truly Spiked & Sparkling brand’s leadership position in the emerging hard sparkling-water category.
Robust Surprise Trend
The company displays solid top- and bottom-line trends, which continued in the third quarter of 2018. While the company surpassed earnings estimates in six out of the trailing eight quarters, it delivered positive sales surprise in four out of the last six quarters. Notably, earnings gained from higher revenues and lower income taxes in the third quarter. Further, top-line growth was primarily fueled by higher shipment volume and depletion growth.
The Boston Beer Company, Inc. Price, Consensus and EPS Surprise
Driven by impressive quarterly results, management raised earnings guidance for 2018. Adjusted earnings per share are now envisioned to be $7.10-$7.70 in 2018 compared with $6.30-$7.30 expected earlier. Of the assumptions for the earnings view, the company raised its depletion and shipment forecast based on favorable trends witnessed so far. It now projects depletions and shipments to grow 12-15% compared with the prior guidance of 7-12%. The company also raised estimates for price increases per barrel to 1-2% versus 0-2% mentioned earlier.
Additionally, the company provided its initial guidance for 2019. It estimates depletion and shipment percentage increases between a high-single digit and low-double digits. Revenue per barrel is likely to increase 0-3%.
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Image: Bigstock
Boston Beer (SAM) Outpaces Peers: Surges 81.7% in a Year
Shares of Boston Beer Company Inc. (SAM - Free Report) have displayed a spectacular show in the past year and emerged as an attractive investment option. Notably, the stock has gained a whopping 81.7% in a year against 19.2% decline recorded by the industry. The Beverages-Alcohol industry is witnessing a downturn due to softness in the beer category as consumers are shifting to healthier drinking options and wines.
We believe that there is momentum left in the stock of this Boston, MA-based alcohol company, backed by its vast non-beer portfolio — including the Twisted Tea, Truly Spiked & Sparkling, and Angry Orchard brands. These brands are witnessing an increased demand as a result of the switch-over from beer. Additionally, the progress on the company’s three-point growth plan — which is focused on cost savings, long-term innovation, and the revival of Samuel Adams and Angry Orchard brands — bodes well.
This is further evident from this Zacks Rank #3 (Hold) company’s long-term impressive earnings growth rate of 10% and a Growth Score of B.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Looking more closely at the stocks in the broader industry, we note that Boston Beer is quite ahead of the peer group. Notably, stocks such as Molson Coors Brewing Company (TAP - Free Report) , Constellation Brands (STZ - Free Report) and Anheuser-Busch InBev SA/NV (BUD - Free Report) have witnessed declines of 18.1%, 8% and 35.5%, respectively, in a year. Let’s delve deeper and find out reasons that are pushing Boston Beer ahead of its peers.
Three-Point Growth Plan on Track
Boston Beer remains committed to the three-point growth plan focused on the revival of its Samuel Adams and Angry Orchard brands, cost-saving initiatives, and long-term innovation.
Firstly, the company plans to revive the Samuel Adams brand through packaging, innovation, promotion and brand communication initiatives. Further, it remains keen on retaining Angry Orchard and Twisted Tea’s momentum while ensuring Truly Spiked & Sparkling's leadership position in the hard sparkling-water category.
Secondly, the company is focused on accelerated cost savings and efficiency projects, with savings directed for further brand development. Based on opportunities in 2018 and 2019, it continues to anticipate improving gross margin by one percentage point every year through 2019. The company’s third priority is long-term innovation and maximizing shareholder value.
Depletions Growth — A Positive Trend
Boston Beer is witnessing sturdy depletions growth for a while now, which is aiding top-line performance. In third-quarter 2018, revenues improved 24.2% year over, driven by 23.5% improvement in shipment volumes and 18% depletions growth. Notably, depletion improvement reflects an accretion from 12% in the second quarter and 8% in the first quarter. Depletions growth was primarily attributed to major innovations, quality and strong brands alongside solid sales execution and support from distributors. Moreover, increases in Twisted Tea, Truly Spiked & Sparkling, and Angry Orchard brands aided growth, which was partially offset by fall in the Samuel Adams brand.
Depletions for the year-to-date period through 42 weeks ended on Oct 20, 2018, are estimated to have grown nearly 13% from the comparable year-ago period. The company’s non-beer portfolio is poised to deliver significant depletions growth in the future on the back of expansion of distribution and customer base for the Twisted Tea brand, success of the Angry Orchard Rose, and the Truly Spiked & Sparkling brand’s leadership position in the emerging hard sparkling-water category.
Robust Surprise Trend
The company displays solid top- and bottom-line trends, which continued in the third quarter of 2018. While the company surpassed earnings estimates in six out of the trailing eight quarters, it delivered positive sales surprise in four out of the last six quarters. Notably, earnings gained from higher revenues and lower income taxes in the third quarter. Further, top-line growth was primarily fueled by higher shipment volume and depletion growth.
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
Upbeat Outlook
Driven by impressive quarterly results, management raised earnings guidance for 2018. Adjusted earnings per share are now envisioned to be $7.10-$7.70 in 2018 compared with $6.30-$7.30 expected earlier. Of the assumptions for the earnings view, the company raised its depletion and shipment forecast based on favorable trends witnessed so far. It now projects depletions and shipments to grow 12-15% compared with the prior guidance of 7-12%. The company also raised estimates for price increases per barrel to 1-2% versus 0-2% mentioned earlier.
Additionally, the company provided its initial guidance for 2019. It estimates depletion and shipment percentage increases between a high-single digit and low-double digits. Revenue per barrel is likely to increase 0-3%.
3 Medical Stocks to Buy Now
The greatest discovery in this century of biology is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating revenue, and cures for a variety of deadly diseases are in the pipeline.
So are big potential profits for early investors. Zacks has released an updated Special Report that explains this breakthrough and names the best 3 stocks to ride it.
See them today for free >>