Yahoo Finance Bear of the Day: The Boston Beer Company, Inc. (SAM)
The Boston Beer Company, Inc. (SAM) posted disappointing Q4 results on February 15 that included a somewhat shocking adjusted loss that sent the stock tumbling once again. The recent downturn is part of a huge fall from its 2021 peaks.
Boston Beer went on a massive roughly three-year surge higher driven by the hard seltzer boom. But the craft beer staple and hard seltzer star became a victim of its own growth, as well as a more congested seltzer space, supply chain setbacks, and beyond.
Starting to Fizzle
Boston Beer was at the forefront of the American craft beer revolution for decades. SAM then launched Truly Hard Seltzer in 2016 and helped kickstart the biggest alcoholic beverage trend since light beer.
Truly and the seltzer boom forced Anheuser-Busch InBev (BUD), Molson Coors (TAP), Constellation Brands (STZ), and countless others to flood the market with their own hard seltzers
Boston Beer’s revenue surged 15% in fiscal 2018, 26% in FY19, 39% in 2020, and another 19% in FY21. This was an insanely impressive run for SAM and yet it still managed to post nearly 2% revenue growth in FY22. Despite the growth, Wall Street is forward looking and decided it was time to dump SAM shares long before the slowdown actually occurred.
Image Source: Zacks Investment Research
Boston Beer’s FY22 depletions decreased by 5%, with shipments 3.8% lower. Wall Street was also scared by the huge fourth quarter earnings miss on February 15 that saw it report an adjusted loss of -$0.93 per share vs. the Zacks Consensus that called for +$0.72 a share. The company said the unexpected quarterly loss was “largely due to our production mix and supply chain inefficiencies.”
Wall Street analysts were forced to quickly lower their EPS outlooks, with its FY23 consensus 26% lower and FY24 now 17% below where it was 60 days ago. The negative earnings revisions are part of a long-term downward trend and help Boston Beer land a Zacks Rank #5 (Strong Sell) right now.
Boston Beer executives touched on the fact that “hard seltzer remains in decline.” But they did note that the firm has “new initiatives in place to improve Truly share trends and adapt our cost structure to the current volume environment, which we believe will lead to long-term success.”
Image Source: Zacks Investment Research
Bottom Line
Boston Beer stock is now down around 75% from its April 2021 peaks. That said, SAM has only fallen 10% in the past 12 months and it was enjoying a nice comeback to start 2023 until its recent Q4 earnings report helped derail the run.
SAM shares fell back under both their 200-day and 50-day moving averages once again. Plus, Boston Beer stock is still trading at 40.4X forward 12-month earnings, which is very rich compared to its Beverages – Alcohol industry’s 20.1X. Therefore, it might be best to stay away from the former high-flyer until Boston Beer can sort out its current setbacks.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Molson Coors Beverage Company (TAP) : Free Stock Analysis Report
Constellation Brands Inc (STZ) : Free Stock Analysis Report
The Boston Beer Company, Inc. (SAM) : Free Stock Analysis Report
