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Can Boston Beer (SAM) Beat Q4 Earnings Amid Soft Shipments?

The Boston Beer Company, Inc. SAM is scheduled to report fourth-quarter 2023 results on Feb 27. In the fourth quarter, the company is anticipated to have registered bottom-line growth from the year-ago quarter’s reported figure.

The Zacks Consensus Estimate for loss is pegged at 22 cents per share, suggesting growth of 76.3% from the loss of 93 cents per share reported in the year-ago quarter. The consensus mark has narrowed in the past 30 days from the prior estimate of a loss of 35 cents per share. For quarterly revenues, the consensus estimate is pegged at $416 million, suggesting a 7.1% decline from the year-ago quarter’s reported number.

The Zacks Consensus Estimate for SAM’s 2023 revenues is pegged at $2.03 billion, indicating a decline of 4.1% from the figure reported in the year-ago quarter. The consensus mark for earnings is pegged at $7.24 per share, which suggests growth of 2.7% from the year-ago quarter’s reported figure. The consensus mark has moved down 1.2% in the past 30 days.

In the last reported quarter, SAM delivered an earnings surprise of 9.7%. It has a trailing four-quarter negative earnings surprise of 77.7%, on average.

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 the progress of its Beyond Beer strategy, the premiumization of the beer industry and robust trends for its twisted tea brand. Additionally, the company’s innovation and intensified attention to pricing and product portfolio expansion efforts bode well.

SAM has been on track with growth of its Beyond Beer category. Beyond Beer has been growing faster than the traditional beer market and the company expects this trend to continue for several years. Its continued strength across the Beyond Beer portfolio is likely to have aided its performance in the to-be-reported quarter. SAM’s continued focus on pricing, product innovation, growth of non-beer categories and brand development is likely to have boosted its operational performance and position in the market.

On the last reported quarter’s earnings call, management estimated price increases of 2-3% for 2023. It anticipated positive price realization in the fourth quarter but at a lower level due to lower third-quarter price increases from the prior year.

Its focus on innovation to revive the Truly brand and expand Twisted Tea’s potential bodes well. As part of product innovation, the company expects to improve the Truly brand trends through a renewed focus on the core business, smart brand innovation, and strong distributor support and retail execution.

The Twisted Tea brand largely drove the growth of Boston Beer in the last reported quarter. The brand’s physical availability, improved geographic, channel and package distribution, effective brand-building campaigns, increased media investment and optimized packaging design have been aiding its performance.

The brand’s growing brand awareness and household penetration are expected to have continued in the to-be-reported quarter. The company earlier predicted the Twisted Tea brand to witness strong double-digit growth in the fourth quarter.

On the operational front, Boston Beer has been benefiting from strong price realization and procurement savings, which more than offset increased inflationary costs. This has been a boon to the gross margin. Additionally, a decline in advertising, promotional and selling expenses on lower freight to distributors due to reduced rates and volumes is likely to have boosted the bottom line in the fourth quarter.

On the last reported quarter’s earnings call, the company anticipated a gross margin of 42-43% for 2023. The company's gross margin guidance integrates an expectation of elevated shortfall fees at third-party breweries and lower fixed cost absorption per barrel at its owned breweries due to lower seasonal volumes in the fourth quarter. Consequently, it expects the year-over-year gross margin improvement to have been lesser in the fourth quarter than that reported in the earlier quarters.

Additionally, the company expects advertising, promotional and selling expenses in 2023 to grow $25-$35 million. This does not include any change in freight costs for the shipment of products to distributors.

However, declines in shipments and depletions, as well as continued challenges in the hard seltzer category, have been weighing on the company’s top-line performance. Soft performances of the Truly Hard Seltzer, Angry Orchard, Samuel Adams and Hard Mountain Dew have been hurting shipments.

Boston Beer has been witnessing a slowdown in the hard seltzer category and the demand for the Truly brand in recent quarters. The slowing hard seltzer trends have been partly hurting the company’s depletions.

On the last reported quarter’s earnings call, management expected fourth-quarter volumes to witness declines due to the continued weakness in Truly volume, partly offset by strong growth in Twisted Tea. The company expected depletions and shipments to decline 5-7% in 2023, including an adverse impact of 1% due to an additional 53rd week in 2022. On a 52-week comparable basis, the company expects depletions and shipments to decline 4-6% in 2023.

What Does the Zacks Model Say?

Our proven model does not conclusively predict 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. But that’s not the case here. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

Boston Beer has an Earnings ESP of 0.00% and a Zacks Rank of 1, at present.

Stocks Poised to Beat Earnings Estimates

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

Inter Parfums IPAR has an Earnings ESP of +5.71% and a Zacks Rank of 2, at present. The company is slated to witness top-line growth when it reports fourth-quarter 2023 results. The Zacks Consensus Estimate for IPAR’s quarterly revenues is pegged at $329 million, which suggests growth of 5.9% from the figure reported in the year-ago quarter.

You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Inter Parfums’ quarterly earnings has moved up 9.4% in the past 30 days to 35 cents per share. However, the consensus mark for earnings suggests a decline of 5.7% from the year-ago quarter’s reported number. IPAR has delivered an earnings surprise of 45.7%, on average, in the trailing four quarters.

Monster Beverage MNST has an Earnings ESP of +10.03% and a Zacks Rank of 3, at present. The company is expected to report top and bottom-line growth when it reports fourth-quarter 2023 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $1.75 billion, which suggests growth of 15.9% from the figure reported in the year-ago quarter.

The Zacks Consensus Estimate for Monster Beverage’s quarterly earnings has remained unchanged in the past 30 days at 39 cents per share. The consensus mark for earnings suggests growth of 34.5% from the year-ago quarter’s reported number. MNST has delivered an earnings surprise of 1.9%, on average, in the trailing four quarters.

Vita Coco Company COCO has an Earnings ESP of +15.38% and a Zacks Rank of 3, at present. The company is expected to witness top and bottom-line growth when it reports fourth-quarter 2023 results. The Zacks Consensus Estimate for COCO’s quarterly earnings has remained unchanged in the past 30 days at 9 cents per share. The consensus mark for earnings suggests 125% growth from that reported in the year-ago quarter.

The Zacks Consensus Estimate Vita Coco’s quarterly revenues is pegged at $98 million, which indicates growth of 6.5% from the figure reported in the year-ago quarter. COCO has delivered an earnings surprise of 25.7%, on average, in the trailing four quarters.

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