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Boston Beer (SAM) to Report Q4 Earnings: Is a Beat in Store?

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The Boston Beer Company, Inc. SAM is expected to register top and bottom-line growth when it reports fourth-quarter 2020 numbers on Feb 17, after market close. The Zacks Consensus Estimate for fourth-quarter earnings is pegged at $3.02 per share, implying a 143.5% increase from the year-earlier quarter's reported figure. However, the consensus mark has moved down 1% in the past seven days.

For quarterly revenues, the Zacks Consensus Estimate stands at $455.9 million, suggesting 51.3% growth from the prior-year quarter’s reported figure.

In the last reported quarter, the company delivered an earnings surprise of 16.4%. Moreover, its bottom line beat the Zacks Consensus Estimate by 23.1%, on average, in the trailing four quarters.

The Boston Beer Company, Inc. Price and EPS Surprise
The Boston Beer Company, Inc. Price and EPS Surprise

The Boston Beer Company, Inc. Price and EPS Surprise
The Boston Beer Company, Inc. price-eps-surprise | The Boston Beer Company, Inc. Quote

Key Factors to Note

Boston Beer has been benefiting from sturdy depletions growth, improvement in shipment volumes and efforts to innovate brands. Key innovations, quality and strong brands as well as sales execution and support from distributors are trends that have been aiding depletions growth.

Further, growth in the Truly Hard Seltzer, Twisted Tea and the Dogfish Head brands are expected to have aided shipments and depletions in the fourth quarter. The company’s innovation in the non-beer categories, including hard teas, ciders and seltzer, has been a hit among liquor drinkers, which is expected to have continued to drive growth in the fourth quarter.

Moreover, the company remains focused on cost-saving initiatives and long-term innovation. These endeavors are likely to have favorably impacted the fourth-quarter performance.

However, it has been witnessing a significant reduction in keg demand from the on-premise channel, and higher labor and safety-related costs at its breweries due to the impacts of the coronavirus outbreak. Notably, a reduction in internal capacity, shifting more volumes to third-party breweries, has been leading to higher production costs due to the COVID-19 outbreak-related safety measures, which are expected to have had a bearing on gross margin in the fourth quarter.

Additionally, higher advertising, promotional and selling expenses along with increased general and administrative costs are expected to have remained a threat to its overall profitability.

Although it is making efforts to revive the Samuel Adams and Angry Orchard brands via packaging, innovation, promotion and brand communication initiatives, the soft performance is likely to have persisted in the quarter under review, more so because of the earlier store closures related to COVID-19.

Zacks Model

Our proven model conclusively predicts an earnings beat for Boston Beer this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Boston Beer has a Zacks Rank #3 and an Earnings ESP of +31.68%.

Other Stocks to Consider

Here are some other companies you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat:

Sanderson Farms, Inc. SAFM has an Earnings ESP of +122.02% and it presently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Monster Beverage Corporation MNST currently has an Earnings ESP of +21.81% and a Zacks Rank #3.

Campbell Soup Company CPB has an Earnings ESP of +3.08% and a Zacks Rank #3 at present.

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