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Boston Beer (SAM) Soars 4.2%: Is Further Upside Left in the Stock?

·2 min read

Boston Beer (SAM) shares soared 4.2% in the last trading session to close at $1,096.70. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 14.7% loss over the past four weeks.

Boston Beer’s stock rally is an extension of its continued innovation efforts that have been impressing investors. Amid the pandemic-led restrictions in the on-premise channel, Boston Beer’s continued focus on pricing, product innovation, growth of non-beer categories and brand development have been boosting its operational performance and position in the market. The company’s innovation in the non-beer categories, including hard teas, ciders and seltzer has been a hit among liquor drinkers, which is likely to continue aiding growth. Resilience and strength in the Truly and Twisted Tea brands, through innovations like Truly Iced Tea Hard Seltzer, has kept the stock in good stride.

Moreover, the company’s recently revealed plans to explore the non-alcoholic cannabis beverages through the opening of the cannabis research and innovation hub in Canada bodes well. Management expects non-alcoholic cannabis beverages to represent a new frontier of innovation.

Price and Consensus

Price Consensus Chart for SAM
Price Consensus Chart for SAM

This brewer is expected to post quarterly earnings of $6.49 per share in its upcoming report, which represents a year-over-year change of +38.4%. Revenues are expected to be $648.72 million, up 43.5% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Boston Beer, the consensus EPS estimate for the quarter has been revised 1.4% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on SAM going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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