Bear of the Day: The Boston Beer Company, Inc. (SAM)
The Boston Beer Company, Inc. (SAM) shares tumbled at the end of February following its disappointing quarter and rough guidance. Wall Street is also nervous about what’s next after Boston Beer announced its CEO transition amid challenging times for the company.
Did the Seltzer Bubble Burst?
Boston Beer is one of the standouts and vanguards of American craft beer. SAM then disrupted the industry in a massive way when it launched Truly Hard Seltzer in 2016.
Boston Beer kickstarted the biggest alcoholic beverage trend since light beer. Truly and hard seltzer’s expansion forced Anheuser-Busch InBev, Molson Coors TAP, Constellation Brands STZ, and countless others to flood the market with their hard seltzers.
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Boston Beer’s revenue surged 15% in fiscal 2018, 26% in FY19, 39% in 2020, and another 19% in FY21. SAM posted roughly 2% revenue growth in FY22 and a -4% sales decline in 2023 as it proved difficult to compete against its booming, Truly-boosted run. Truly faces a tough test ahead as the seltzer space grows more saturated.
Boston Beer’s Q4 depletions decreased 9%, with shipments down 12%. The company’s fourth quarter sales dropped 12% and it reported an adjusted quarterly loss of -$1.49 per share, falling way short of our -$0.22 estimate.
Boston Beer’s adjusted earnings outlook is down 11% for FY24 and FY25. Plus, its first quarter consensus tumbled from +$0.41 to a -$0.02 loss.
Boston Beer is still projected to grow its sales and earnings in 2024 and 2025. But its negative revisions help it land a Zacks Rank #5 (Strong Sell) right now.
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The disappointing quarterly results and guidance were accompanied by the news that CEO Dave Burwick would retire effective April 1. Michael Spillane, a Nike veteran, is set to take over the chief executive position to help Boston Beer get back on track.
Bottom Line
Boston Beer stock has plummeted roughly 75% from its April 2021 peaks. The stock has been on a wild ride during the last 12 months, including a 19% drop since its February 27 earnings release.
SAM’s recent drop sent it back below its 50-week moving average and it is far below its 200-week. Plus, Boston Beer stock trades at 27.2X forward 12-month earnings, which is rich compared to its Beverages – Alcohol industry’s 18.3X. Therefore, it might be best to stay away from Boston Beer unti it proves a turnaround is in its sights.
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The Boston Beer Company, Inc. (SAM) : Free Stock Analysis Report
