Stocks: Boston Beer plunges on slashed guidance, Sherwin-Williams slides

Yahoo Finance Live’s Julie Hyman and Brian Sozzi break down how Boston Beer and Sherwin-Williams are trading lower today.

Video transcript

JULIE HYMAN: Let's talk about another one that we're watching, and this is one that has been perennially on our movers list as of late-- not for the right reasons. I'm talking about Boston Beer. The company is now coming out again and revising its forecast, and it looks like it has to do with excess inventory of its Truly hard seltzer. So we've already talked about how the various alcohol makers sort of failed to anticipate that maybe hard seltzer would be a fad, or at least the demand wouldn't be as large as anticipated. But Boston Beer just seems to still be struggling with this.

BRIAN SOZZI: This is brutal, and you're seeing the price targets come out here on the street. Deutsche Bank with a very sharp take on Boston Beer after this release, essentially saying that the stock is still going to be in the penalty box. A lot of investor disappointment on Boston Beer, and as they should have. Boston Beer coming out here saying our earnings projected for last year will be between a loss of $1 to income of $1. Previously, they were looking for income of $2 to $6 a share. So that is a massive whiff, and I think really underscores how much Boston Beer overestimated demand of Truly hard seltzer.

And then secondarily, how many cases of Truly are just sitting in bar back rooms and convenience stores collecting dust and essentially going flat. Keep in mind-- Boston Beer had to take a writedown on hard seltzer last quarter here. Looks like those problems are continuing.

JULIE HYMAN: Yes, they are. We're going to take the opening bell on this Friday morning.

[OPENING BELL RINGING]

Another SPAC ETF there coming to market. SPAX, appropriately--

BRIAN SOZZI: Nice.

JULIE HYMAN: That is the ticker.

BRIAN SOZZI: I love it.

JULIE HYMAN: Fun with that one. Who knows? Maybe we'll have another big year for SPACs. We'll see. And another mover that we wanted to check on, which is another one that we've talked about before that is still struggling is Sherwin-Williams and the paint business. The company reporting preliminary numbers for its fourth quarter that missed estimates. It comes out with a full quarter, by the way, just in a couple of weeks on January 27th but felt the need to come out ahead of that and announce these numbers.

Preliminary net sales-- 4.76 billion, just shy of estimates. But earnings per share really below estimates here. $1.35 is that preliminary number. $1.69 is what analysts had been estimating and it seems like that this has to do with raw materials problems and labor problems for Sherwin-Williams.

BRIAN SOZZI: Yeah, we don't recommend stocks here, Julie. We're not in that game here at Yahoo Finance. But I will make a recommendation. If you need paint for your house, buy it before February 1st, because Sherwin-Williams is pushing through a 12% price increase because of the inflation it is seeing.

Now, I was on a analyst call this morning, or analyst/media call because, clearly, I am now a member of the media where they were talking about-- CEO John Morikis-- labor shortages in the stores and in the plants continuing to impact this business. Shortages in key ingredients to make paint. So for those looking for the supply chain problems that have hammered corporate America the past year, if you're looking for that to end sometime this year, look at what Sherwin-Williams had to say, because clearly you are probably wrong on that assumption.

Morikis also noting this, too, which is a red flag to me as we kick off earnings season-- January started slowly for the business, which is very interesting but I guess dovetails with them seeing labor shortages. You can't necessarily sell paint if you have no people in your stores to sell it.

JULIE HYMAN: At the same time, I thought it was interesting, and maybe you can tell us if he expanded on the call-- he said demand, end demand was still strong. So again, this is yet another company that's putting all of the onus and all of the blame on what's happening in supply chain and not what's happening in the stores, that there are still people who want to buy that paint.

BRIAN SOZZI: My sense coming off the call, Julie, is demand is a little bit less than strong. You want to say solid, good. Now, demand was strong, he was talking about back in October. But when you hear a CEO come out and say, hey, our January started off slowly, you're not just worried about what Sherwin-Williams, what their first quarter might look like. You're worried about what a rival PPG industries-- they also make paint. How has their year started? How has Home Depot's year started? How has Lowe's year started? You have to start thinking about the whole supply chain if you're trading this sector.

JULIE HYMAN: Yeah, most definitely. We'll be watching those other paint makers, too, to see if they are feeling that pressure.