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Boston Beer Inc. (SAM): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

Summary:

We have upgraded our long-term recommendation on Boston Beer to Outperform based on its outstanding performance in two consecutive quarters. The company's third-quarter 2014 results reflected a year-over-year growth in both top and bottom lines of over 25% and 47%, respectively, while it surpassed the respective Zacks Consensus Estimates. Robust quarterly performance allowed the company to be optimistic about fiscal 2014 despite a sluggish economic recovery and cautious consumer environment. Furthermore, we are impressed with the company's consistent focus on brand building and efforts to include new products in its beer business, which are key growth drivers for the stock. We also appreciate Boston Beer's efforts to increase wholesale distribution points and execute its strategic merchandising initiatives that will assist in boosting sales.

Overview:

Founded by Jim Koch, Harry M. Rubin, and Lorenzo Lamadrid in Boston, MA in 1984, Boston Beer Co. Inc. is the largest craft brewer in the United States. Boston Beer produces beer, malt beverages, and cider products at Company-owned breweries and under contract. The company sells its alcoholic beverages in the United States, Canada, Europe, Israel, the Caribbean, the Pacific Rim, Mexico, and Central and South America through a formidable network of wholesale distributors.

Approximately 91% of the total beer volume is brewed at the company's own breweries while the remaining volumes are sourced from contract brewers. Boston Beer has four company-owned breweries namely Boston Brewery located at Boston, MA Cincinnati Brewery located at Cincinnati, OH Pennsylvania Brewery located at Breinigsville, PA and Angel City Brewery located at Los Angeles, CA.

The company produces and sells three types of alcoholic beverages:

Beer: The company's beer products are primarily positioned in the "Better Beer" category of the beer industry, which includes craft beers, domestic specialty beers and imported beers. The category is decided on the basis of the premium price, quality, image and taste of the beer. The company is mainly famous for its Samuel Adams Boston Lager or Sam Adams Boston Lager beer brands under which it sells about 50 different types of beers. The brand is carrying ahead a legacy of over 150 years as the preparation follows the original recipe of Jim Koch's great-grandfather Louis Koch who developed it in 1860 in Minster, OH. Its other beer brands include Sam Adams Light, Cherry Wheat, Black Lager, Blackberry Witbier, Boston Ale, Coastal Wheat, Cream Stout, Pale Ale, Scotch Ale, Honey Porter, Noble Pils, Latitude 48 IPA, and Irish Red.

Malt Beverages: Apart from producing beer, the company also produces a malt beverage known as Twisted Tea which contains Iced Tea and alcohol. The company sells Twisted Tea malt beverage in various flavors including Original, Half & Half, Midnight, Light, Rasberry, Peach, Sweet Tea and Backyard Bash.

Cider: The company produces alcoholic ciders, which are made of apple juice. The company offers its HardCore Cider in Black, Crisp Hard and Golden flavors.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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