For Immediate Release
Chicago, IL – July 31, 2019 – Zacks Equity Research Shares of The Boston Beer Company SAM as the Bull of the Day, iRobot IRBT asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Apple Inc. AAPL, Electronic Arts EA and Mondelez MDLZ.
Here is a synopsis of all five stocks:
Bull of the Day:
The Boston Beer Company posted stronger-than-projected second-quarter financial results last week, even as the larger beer industry grapples with changing consumer habits. Despite slowing beer sales in the broader market, SAM shares have soared nearly 60% in 2019 to blow away the S&P 500 and its industry.
Boston Beer last Thursday posted revenue of $318.4 million, which marked a $45.3 million or 16.6% climb from the year-ago period. The firm pointed to continued strength from its Truly Hard Seltzer brand, along with Twisted Tea as big reasons for its sales growth as its flagship Samuel Adams sales slow. “Our depletions growth in the second quarter was a result of increases in our Truly Hard Seltzer and Twisted Tea brands that were only partially offset by decreases in our Samuel Adams and Angry Orchard brands,” the company wrote in prepared remarks.
“Truly continues to grow beyond our expectations. We are launching Truly draft nationally this quarter while we continue to expand distribution across all channels.”
The firm launched Truly in April 2016. This helped Boston Beer grab market share and build brand awareness relatively early on in the quickly the growing hard seltzer market. And the category hardly seems like a fad.
In fact, UBS analyst Sean King predicts the category can jump from $550 million at the moment to $2.5 billion by 2021, which implies an annual growth rate of 66%. Plus, hard seltzer sales already surged 193% in the 52-week period that ended on April 20, according to Nielsen.
The Boston-based firm is not alone in its purist of this new growth market. Anheuser- Busch InBev owns Bon & Viv Spiked Seltzer, while Molson Coors owns Henry’s Hard Sparkling Water and Constellation has rolled out a Corona-branded flavored malt beverage that is part of the larger non-beer category.
Along with Truly’s success, Boston Beer officially closed its $300 million merger with Dogfish Head Craft Brewery on July 3. We can also see that SAM stock has roared back recently after an extended downturn.
Boston Beer shares have skyrocketed 145% in the past two years to crush its industry's roughly 9% average decline. SAM stock is also up 40% in the past 12 months, while the alcoholic beverages market dipped 4.5%.
Outlook & Earnings Trends
Boston Beer expects full-year 2019 shipments and depletions to jump between 17% and 22%, including Dogfish Head. This marks a significant jump from its previous 10% to 15% guidance. Excluding the Dogfish Head impact, fiscal year shipments and depletions are projected to climb between 13% and 18%.
Shipments and depletions don’t exactly equal revenue-generating sales. With this in mind, our current Zacks Consensus Estimate calls for Boston Beer’s fiscal 2019 revenue to jump 11.7% to reach $1.13 billion. Looking further down the road, SAM’s fiscal 2020 revenue is projected to climb nearly 9% higher than our current-year estimate to reach $1.23 billion.
At the bottom end of the income statement, Boston Beer’s adjusted full-year 2019 EPS figure is projected to surge 17.5% to $8.78 per share. In a sign of sustained expansion, the firm’s 2020 earnings are expected to climb roughly 13% above our 2019 projection.
Investors will also see that SAM’s earnings estimate revision activity has boosted its fiscal 2019 and 2020 outlook recently. Boston Beer has also topped our quarterly earnings estimates by an average of 35% over the trailing four periods.
Bear of the Day:
iRobot shares are down significantly in 2019 and have plummeted roughly 19% since it reported its second-quarter financial metrics on Tuesday, July 23. The downturn came despite the fact that the household robot maker posted better-than-expected earnings results. So, it’s time to see why iRobot is Wednesday’s Bear of the Day.
Quick Q2 Recap
The Bedford, Massachusetts-based company posted earnings of $0.25 a share. This crushed our $0.03 a share Zacks Consensus Estimate, but it did mark a significant downturn from the year-ago period’s EPS of $0.37. Meanwhile, iRobot’s sales climbed roughly 15% to $260.2 million, which fell just short of our projection.
The reason for iRobot’s decline stems from the firm’s exposure to the U.S. and China trade war. Last quarter, the robotic vacuum maker said that it would slowly move production of some of its “more easy to build products” outside of China to help fight tariffs worries. Executives claimed that the efforts would help iRobot create better long-term supply chain flexibility.
But Wall Street doesn’t seem satisfied yet. And this disappointment comes with good reason, since the firm lowered its 2019 guidance on the back of trade-related setbacks. “Although we achieved our U.S. revenue target in the second quarter, we believe that the direct and indirect impacts of the ongoing U.S.-China trade war and the recently implemented 25% tariffs are likely to constrain U.S. market segment growth in the second half of the year below our expectations at the start of 2019,” the company wrote in prepared remarks last week.
We will get into iRobot’s updated guidance and our estimates, which are far worse. But it’s worth reviewing IRBT’s price movement over the last serval years to help better understand what’s going on.
Investors can see that shares of iRobot have been on a roller coaster ride over the past 24 months and are now down 6% in the last 52-weeks. This lags its industry’s roughly 3% climb over the last year and the S&P 500’s 6% expansion.
Outlook & Earnings Trends
iRobot executives last week updated both top and bottom-line guidance for fiscal 2019. The firm lowered its revenue outlook from between $1.28 billion and $1.31 billion down to the $1.20 to $1.25 billion range. Meanwhile, the company dropped its earnings guidance from between $3.15 to $3.40 a share this year to anywhere between $2.40 and $3.15.
With this in mind, our current Zacks Consensus Estimates call for the firm’s Q3 earnings to tumble over 48% to $0.58 per share on the back of a 1.4% sales decline that would see it hit $260.8 million. The company’s full-year fiscal 2019 EPS figure is then projected to fall by a similar 48% to reach $2.73 a share.
Apple (AAPL) Beats on Surprise China Numbers; Plus EA, MDLZ
Apple Inc.'s long-awaited fiscal Q3 earnings report was released Tuesday after the closing bell, with results better than expected on both top and bottom lines: earnings of $2.18 per share outpaced estimates by 8 cents, while $53.8 billion in quarterly sales improved on the estimated $53.31 billion. Revenues grew year over year, though earnings did not.
iPhone sales in the quarter came in a tad light from expectations to 25.99 million units, down roughly 15% year over year. And its Services segment, bringing in $11.46 billion, was beneath the $11.7 billion expected. Yet guidance was up on stronger Wearables, and especially a surprise $9.16 billion in revenues from its Chinese market. Shares cranked up 3% almost immediately on the news.
Electronic Arts is up 4% in late trading Tuesday following its fiscal Q4 earnings report, which saw revenues sail past quarterly estimates: $743 million versus $724.5 million in the Zacks consensus (though still down 6% from year-ago totals). Earnings also outperformed expectations, but this was due to a large one-time income tax benefit of more than $5 per share. The company cited its new Apex Legend game's success as a reason for the solid quarterly performance. For more on EA's earnings, click here.
International snack giant Mondelez met its bottom-line estimate of 57 cents per share for its Q2 report, while posting sales of $6.06 billion which surpassed the $5.97 billion analysts were looking for. Organic revenues were well ahead of the 2.8% expected, to 4.6% in the quarter. The company also raised full-year guidance as well as its quarterly dividend.
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The Boston Beer Company, Inc. (SAM) : Free Stock Analysis Report
Apple Inc. (AAPL) : Free Stock Analysis Report
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iRobot Corporation (IRBT) : Free Stock Analysis Report
Electronic Arts Inc. (EA) : Free Stock Analysis Report
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