Yahoo Finance Boston Beer (SAM) Stock Rallies on Q1 Earnings & Revenue Beat
The Boston Beer Company, Inc. SAM reported dismal first-quarter 2024 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. Additionally, the company reported year-over-year growth in revenues and earnings per share in the reported quarter. Results benefited from improved volumes, favorable pricing, recovery in shipments and depletions, and a robust margin performance.
The company’s earnings per share of $1.40 in first-quarter 2024 moved up significantly from a loss of 73 cents in the year-ago quarter. The bottom line significantly beat the Zacks Consensus Estimate of earnings of 8 cents. The increase mainly resulted from top-line growth, accompanied by improved margins.
Net revenues advanced 3.9% year over year to $426.1 million and surpassed the Zacks Consensus Estimate of $414 million. The increase can be mainly attributed to a rise in volume, favorable pricing and lower returns. Additionally, the company’s first-quarter revenues reflected an improvement in shipments, along with flat depletions. Excluding excise taxes, the top line rose 3.9% year over year to $452.2 million.
Backed by the strong first-quarter 2024 results, shares of Boston Beer rallied 7.9% in the after-hours trading session on Apr 25, 2024. The Zacks Rank #4 (Sell) stock has lost 20.6% in the past three months compared with the industry’s 5.2% decline.
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Quarter in Detail
The shipment volume improved 0.9% from the year-ago period to 1.6 million barrels in the first quarter of 2024, whereas depletions were flat year over year. Shipment growth mainly resulted from strong Twisted Tea performance, offset by continued declines in Truly Hard Seltzer and other brands. Notably, shipments were higher than depletions on account of increased distributor inventories to support the company’s peak selling season and the implementation of SAM’s new automated customer ordering and inventory management system.
The gross profit improved 19.7% year over year to $186.3 million, whereas the gross margin expanded 570 basis points (bps) to 43.7% from 38% in the year-ago quarter. The gross margin primarily benefited from strong price realization, favorable comparisons against high returns and inventory obsolescence costs in the prior year, lower brewery processing costs per barrel due to higher volumes, and procurement savings. This was partly offset by higher inflationary costs. The company’s gross margin included $1 billion of shortfall fees and $4.2 million of non-cash expenses related to third-party production pre-payments, impacting the gross margin by 20 bps and 100 bps, respectively, in the first quarter of 2024.
Advertising, promotional and selling expenses declined 4.1% in the first quarter to $120.3 million due to lower freight to distributors of $3.6 million on reduced rates and improved freight efficiencies, partly negated by higher volumes. In the quarter, the company revealed that brand investments declined $1.6 million due to reduced promotional activity, offset by increased media investments.
General and administrative expenses increased 15.3% year over year to $50.4 million mainly due to higher salaries and benefits costs, offset by lower consulting costs.
The company reported an operating profit of $15.4 million against a loss of $13.9 million in the year-ago quarter.
The Boston Beer Company, Inc. Price, Consensus and EPS Surprise
The Boston Beer Company, Inc. price-consensus-eps-surprise-chart | The Boston Beer Company, Inc. Quote
Financials
As of Mar 30, 2024, Boston Beer had cash and cash equivalents of $205.4 million, and total stockholders’ equity of $1,046.7 million. The company currently has $150 million in its line of credit, which, along with its cash position, will be sufficient to meet cash requirements.
The company repurchased Class A shares worth $65 million year to date. This included share repurchases worth $50 million in the first quarter ended Mar 30, 2024, and $15 million between Apr 1 and Apr 19. The company had $201.5 million remaining under its existing share repurchase authorization worth $1.2 billion as of Apr 19, 2024.
Outlook
Backed by the business momentum witnessed in the first quarter, Boston Beer reaffirmed its guidance for 2024. The company envisions GAAP earnings per share of $7-$11 for 2024. Depletions and shipments are expected between a low-single-digit decline and a low-single-digit increase. The company estimates a price hike of 1-2% for 2024.
SAM anticipates a gross margin of 43-45% for 2024. The company's gross margin guidance includes the impacts of 50-75 bps from elevated shortfall fees and 125-150 bps from non-cash expenses of third-party production pre-payments.
Advertising, promotional and selling expenses in 2024 are expected between ($5) million and $15 million. This does not include any change in freight costs for the shipment of products to distributors. The company anticipates an effective tax rate of 28.5% for 2024. Capital spending is expected to be $90-$110 million for 2024.
Consumer Staples Stocks Worth a Look
We have highlighted three better-ranked stocks from the Consumer Staples sector, namely Coca-Cola FEMSA KOF, Vita Coco Company COCO and Kraft Heinz Company KHC.
Coca-Cola FEMSA currently has a Zacks Rank #2 (Buy). KOF shares have risen 7.3% in the past three months. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Coca-Cola FEMSA’s current financial-year sales and EPS suggests growth of 10.7% and 25.1%, respectively, from the year-ago period’s reported figures. KOF has a trailing four-quarter negative earnings surprise of 2.1%, on average.
Vita Coco currently carries a Zacks Rank #2. COCO shares have rallied 16.8% in the past three months. The company has a trailing four-quarter earnings surprise of 31.3%, on average.
The Zacks Consensus Estimate for Vita Coco’s current financial-year sales and earnings suggests growth of 1.8% and 24.3%, respectively, from the year-ago period’s reported figure.
Kraft Heinz currently carries a Zacks Rank #2. KHC shares have risen 2.9% in the past three months. The company has a trailing four-quarter earnings surprise of 7.6%, on average.
The Zacks Consensus Estimate for Kraft Heinz’s current financial-year sales and earnings suggests growth of 0.5% and 1.3%, respectively, from the year-ago period's reported figures.
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Vita Coco Company, Inc. (COCO) : Free Stock Analysis Report
Coca Cola Femsa S.A.B. de C.V. (KOF) : Free Stock Analysis Report
The Boston Beer Company, Inc. (SAM) : Free Stock Analysis Report
Kraft Heinz Company (KHC) : Free Stock Analysis Report
