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Factors Likely to Influence Boston Beer's (SAM) Q1 Earnings

The Boston Beer Company, Inc. SAM is scheduled to report first-quarter 2023 results on Apr 27. In the first quarter, the company is anticipated to have registered top and bottom-line declines from the prior-year quarter’s reported figures.

The Zacks Consensus Estimate is pegged at a loss of 32 cents per share, whereas it reported a loss of 16 cents in the year-earlier quarter. The consensus mark has narrowed by a couple of cents in the past 30 days. For quarterly revenues, the Zacks Consensus Estimate is pegged at $418 million, suggesting an 8.6% decline from the prior-year quarter’s reported number.

We expect the company’s first-quarter net revenues to decline 1.7% year over year to $422.6 million. Our model estimates the loss to widen significantly year over year to 49 cents per share.

In the last reported quarter, SAM delivered a negative earnings surprise of 229.2%. It has a trailing four-quarter negative earnings surprise of 83.7%, 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 witnessing soft bottom-line trends due to increased supply-chain costs and higher operating expenses. Inflationary packaging, ingredient and energy costs, elevated inventory obsolescence costs, and higher brewery processing have been weighing on the gross margin in the recent quarters. Continued headwinds from increased costs are expected to have marred the bottom-line performance in the to-be-reported quarter.

Sluggishness in the hard seltzer category, an unfavorable product mix and supply-chain inefficiencies are also expected to have affected Boston Beer’s performance in the quarter under review. Further, higher advertising, promotional and selling expenses are likely to have continued spoiling its performance.

On the last reported quarter’s earnings call, management expected Boston Beer to remain sensitive to changes in volume projections, mostly related to the hard seltzer category, supply-chain performance and inflationary impacts. It anticipated the slowed hard seltzer sales to mainly impact SAM’s Truly hard seltzer performance, which is expected to continue through the first half of 2023.

Due to these factors, management predicts first-quarter 2023 shipments to be at the lower-end of the company’s 2023 guidance of a 2-8% decline, backed by the launch of Truly Margarita. Also, it expects to report a loss in the first quarter.

However, continued strength across the Beyond Beer portfolio is likely to have aided its performance in the to-be-reported quarter. The company’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. SAM’s focus on innovation to revive the Truly brand and expand Twisted Tea’s potential bodes well.

Boston Beer’s commitment to the three-point growth plan — focus on reviving its Samuel Adams and Angry Orchard brands, cost-saving initiatives, and innovation — is expected to have contributed to the quarterly performance.

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 to buy or sell before they’re reported with our Earnings ESP Filter.

Boston Beer has an Earnings ESP of -51.56% and a Zacks Rank #3 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.

Colgate-Palmolive CL has an Earnings ESP of +1.43% and currently carries a Zacks Rank of 2. It is likely to register top-line growth when reporting first-quarter 2023 results. The consensus mark for CL’s quarterly revenues is pegged at $4.62 million, which suggests 5% growth from the prior-year quarter’s reported figure.

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

The consensus mark for Colgate-Palmolive’s quarterly earnings is pegged at 70 cents per share, suggesting a decline of 5.4% from the year-ago quarter’s reported figure. The estimate has been unchanged in the past 30 days. CL has delivered an earnings surprise of 0.35%, on average, in the trailing four quarters.

Hershey HSY currently has an Earnings ESP of +0.47% and a Zacks Rank of 3. It is likely to register increases in the top and bottom lines when reporting first-quarter 2023 results. The Zacks Consensus Estimate for HSY’s quarterly earnings has moved up by a penny in the past seven days to $2.67 per share, indicating growth of 5.5% from the year-ago quarter's figure.

Hershey’s top line is expected to have risen year over year. The Zacks Consensus Estimate for HSY’s quarterly revenues is pegged at $2.9 billion, suggesting growth of 8.8% from the prior-year quarter’s reported figure. HSY has delivered an earnings surprise of 11.3%, on average, in the trailing four quarters.

Keurig Dr Pepper KDP currently has an Earnings ESP of +0.50% and a Zacks Rank of 3. It is likely to register an increase in the top line when reporting first-quarter 2023 results. The Zacks Consensus Estimate for quarterly revenues is pegged at $3.3 billion, implying a rise of 7.1% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for Keurig’s quarterly earnings is pegged at 33 cents per share, suggesting no change from the year-ago quarter’s reported number. The estimate has been unchanged in the past 30 days. KDP has delivered a negative earnings surprise of 0.5%, on average, in the trailing four quarters.

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