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Here's Why Boston Beer (SAM) Stands Out Amid Industry Peers

Zacks Equity Research

The Boston Beer Company, Inc. SAM has been a strong performer, evident from its robust earnings surprise history and stock momentum. In fact, the company has been consistently doing well, courtesy of its commitment toward reviving its Samuel Adams and Angry Orchard brands, cost-saving initiatives and long-term innovation. Further, the company is poised to gain from increased investments in the Truly brand, which will bolster its position in the fast-growing hard seltzer category. As a result, Boston Beer has emerged as an attractive investment option.

Driven by these positives, shares of this Zacks Rank #1 (Strong Buy) company have surged 44% in a year, compared with the industry’s 11.1% growth. You can see the complete list of today’s Zacks #1 Rank stocks here.



In third-quarter 2019, the company delivered positive earnings surprise for the fifth straight quarter, and fourth sales beat in the last five quarters. Robust momentum in top and bottom lines can be attributed to solid shipment and depletions growth in the past few quarters.

Depletions continue to gain from major innovations, quality of products and strong brands alongside solid sales execution and support from distributors. Moreover, increases in Truly Hard Seltzer and Twisted Tea brands as well as the inclusion of the Dogfish Head brand is boosting depletions growth. On the other hand, robust shipment growth is the result of the company’s efforts to ensure that distributors’ inventory levels were appropriate to cater to increased customer demand. Driven by the positive trends, management also raised the lower end of earnings, shipments and depletions view for 2019.

Looking more closely at stocks in the broader industry, we note that the Boston Beer has outpaced its peers. Notably, stocks like Molson Coors TAP and Constellation Brands STZ have witnessed declines of 20.6% and 3.3%, respectively, in the past year. Its close peer Anheuser-Busch InBev BUD has gained 11.1% the same period.

Factors Driving Boston Beer’s Growth Story

Boston Beer remains focused on its three-point growth plan, which targets the revival of the Samuel Adams and Angry Orchard brands, cost-saving initiatives and long-term innovation. For the Samuel Adams brand, the company is undertaking packaging, innovation, promotion and brand communication initiatives to boost demand. Further, it is working to maintain momentum in the Angry Orchard and Twisted Tea’s while ensuring Truly Spiked & Sparkling's leadership position in the hard sparkling water category.

The company has also accelerated cost savings and efficiency projects directed toward further brand development. Its third priority is long-term innovation and maximizing shareholder value. Boston Beer remains optimistic about the future of craft beer and cider categories.

Notably, the company is lately witnessing robust trends in the Truly Hard Seltzer and Twisted Tea brands, which is driving depletions. The Truly brand delivered triple-digit volume growth in the third quarter, while Twisted Tea generated double-digit volume growth. The company is focused on promoting the Truly brand to take advantage of a shift in consumer preference to the fast-growing hard seltzer category. In the third quarter, it launched Truly Draft nationally and continued to expand package distribution across all channels.

It is also initiating a new high-profile advertisement campaign for Truly, featuring the famous comedian Keegan-Michael Key. Furthermore, the company’s recent multiyear U.S. partnership with the National Hockey League (“NHL”) makes Truly Hard Seltzer the official drink of the League. This partnership not only benefits the Truly brand but also extends benefits to other brands, including Samuel Adams and Dogfish Head.

Additionally, the company is launching new formulations for all Truly flavors to make this brand the best tasting hard seltzer around. In early 2020, it plans to launch the Truly Hard Seltzer Lemonade in both a variety 12-pack and single-serve sizes. It also expects to roll out another new flavor, Watermelon Kiwi, which will be available in Truly Tropical Variety Pack and 6-packs. With these new flavors, NHL partnership and new ad campaign, we believe the company well positioned to become a leader in the hard seltzer category while making Truly a core brand.

Moreover, this Boston-based alcohol stock has an impressive long-term earnings growth rate of 10% and a Growth Score of A.

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