Slowing growth and too much inventory is expected to wipe out the company's 2021 profit.
What happened
Shares of Boston Beer (SAM 0.75%) were down 9.8% as of 12:17 p.m. ET on Friday after the company slashed its full-year earnings guidance.
The news follows a sharp slowdown in hard seltzer demand that began last summer, sending Boston Beer's stock price down 51% over the past year.
SAM data by YCharts
So what
The company warned of slowing demand in hard seltzer in the second-quarter earnings report last July, where its Truly brand is one of the most popular in the market.
The deceleration in demand, or depletions, left Boston Beer with too much inventory on hand.The problem is temporary, but the higher costs from oversupply are now expected to wipe out the company's profit for 2021.
Image source: Getty Images.
Now what
Guidance now calls for full-year earnings per share to be between a loss of $1 and a profit of $1. While consumer demand has been at the high end of expectations since October, shipment growth and gross profit margin for the company's products are trending below previous guidance.
Boston Beer launched Truly in 2016,and it's been very successful in becoming one of the top hard seltzer brands in a fast-growing market. Investors had bid up the share price expecting the company to maintain its robust earnings growth, but investors are now adjusting future growth expectations lower.
Management still believes in the long-term trajectory of the hard seltzer category and will continue investing to gain market share, where Boston Beer is already the No. 2 player in "beyond beer" products.
This top alcohol stock will be fine in the long run and now offers much better value to investors. It currently trades at 23 times this year's earnings estimates, which is just a small premium to the slower-growing Anheuser-Busch InBev.
John Ballard has no position in any of the stocks mentioned. The Motley Fool recommends Anheuser-Busch InBev NV and Boston Beer. The Motley Fool has a disclosure policy.
FAQs
Boston Beer (SAM) Q2 Earnings Miss Estimate, Shipments Dip 6.4% Boston Beer's (SAM) Q2 results reflect the impacts of soft shipment and depletion volumes due to continued headwinds in the hard seltzer category, which hurt the Truly Hard Seltzer brand.
Is Boston Beer stock a buy? ›
Boston Beer has a consensus rating of Hold which is based on 2 buy ratings, 7 hold ratings and 1 sell ratings. The average price target for Boston Beer is $315.90. This is based on 10 Wall Streets Analysts 12-month price targets, issued in the past 3 months.
What is the target for Boston Beer stock? ›
Analyst Price Targets
Based on analysts offering 12 month price targets for SAM in the last 3 months. The average price target is $316.9 with a high estimate of $355 and a low estimate of $250.
Has Boston Beer ever paid a dividend? ›
Historical dividend payout and yield for Boston Beer (SAM) since 1971. The current TTM dividend payout for Boston Beer (SAM) as of July 19, 2024 is $0.00. The current dividend yield for Boston Beer as of July 19, 2024 is 0.00%.
What happened to Boston Beer Works? ›
UPDATED: July 27, 2021 at 3:52 p.m. Pint lovers will have to drown their sorrows elsewhere over this pandemic restaurant casualty: Boston BeerWorks has permanently closed all its locations. “Sad to say but we've brewed and served our last beers. We've decided to pack it in due to the pandemic and all that.
Is Boston Beer undervalued? ›
At today's price, Boston's market capitalization is estimated at about $3.95 billion. This is significantly lower than its record valuation of $15.98 billion in April 2021.
Is Boston Beer profitable? ›
Profit margin can be defined as the percentage of revenue that a company retains as income after the deduction of expenses. Boston Beer net profit margin as of March 31, 2024 is 4.6%.
What company owns Boston Beer Company? ›
The Boston Beer Company went public, selling shares of Class A Common Stock on the New York Stock Exchange, under the ticker symbol, "SAM". These shares, however, have no voting rights, while the company is controlled through its Class B Common Stock, of which Koch owns 100% of the shares.
Does Boston Beer Company have debt? ›
Given zero long-term debt on its balance sheet, Boston Beer Company has no solvency issues, which is used to describe the company's ability to meet its long-term obligations.
How much is Boston Beer Company worth? ›
InvestingPro Data: The company's market capitalization stands at $3.19 billion, reflecting its current valuation in the market.
The Company's IPO was November 15, 1995. Class A Common stock was $15.00 per share at that time.
How many barrels of beer does Boston Beer Company produce? ›
The Boston Beer Company's production volume 2014-2023
According to the report, the company produced and shipped approximately 7.68 million barrels of beer in 2023. The Boston Beer Company is one of the largest craft breweries in the United States.
Should I buy Boston Beer stock? ›
The financial health and growth prospects of SAM, demonstrate its potential to perform inline with the market. It currently has a Growth Score of B. Recent price changes and earnings estimate revisions indicate this would be a good stock for momentum investors with a Momentum Score of B.
What stock pays the highest dividend? ›
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| AG Mortgage Investment Trust Inc (MITT) | 9.70% |
| Evolution Petroleum Corporation (EPM) | 9.06% |
| CVR Energy Inc (CVI) | 8.20% |
| Altria Group Inc. (MO) | 8.14% |
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- What dividends and REITs are.
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Boston Beer net profit margin as of March 31, 2024 is 4.39%. Boston Beer Co. Inc. is one of the largest craft brewers in the United States.
Is Boston Omaha stock a good buy? ›
Boston Omaha has 56.04% upside potential, based on the analysts' average price target. Boston Omaha has a consensus rating of Moderate Buy which is based on 2 buy ratings, 0 hold ratings and 0 sell ratings. The average price target for Boston Omaha is $23.50.
Why is there a beer shortage right now? ›
Inflation and supply chain pressures on brewers are intensifying. Beer makers are facing many challenges as inflation and supply chain issues raise cost of brewing and shipping. Shortages in aluminum cans and carbon dioxide, used in brewing, have hampered some brewers.
