Things to Know Ahead of Boston Beer's (SAM) Q3 Earnings

The Boston Beer Company, Inc. SAM is slated to report third-quarter 2020 results on Oct 22. In the last reported quarter, the company delivered an earnings surprise of 113.2%. Moreover, its bottom line beat the Zacks Consensus Estimate by 26.1%, on average, in the trailing four quarters.

The Zacks Consensus Estimate for third-quarter earnings is pegged at $5.24 per share, implying a 46.4% increase from the year-earlier quarter's reported figure. The consensus mark moved north 16 cents in the past 30 days. For quarterly revenues, the Zacks Consensus Estimate stands at $533.7 million, suggesting 41% growth from the prior-year quarter’s reported figure.

Factors to Note

Boston Beer has been benefiting from sturdy depletions growth, improvement in shipment volumes and efforts to innovate brands. It continued to experience strength in shipments and depletions on the back of its Truly Hard Seltzer and Twisted Tea brands as well as the Dogfish Head brands. Further, the Twisted Tea brand is likely to have retained strong volume growth rates that are well above full-year 2019 trends. Moreover, the company remains focused on cost-saving initiatives and long-term innovation. Such endeavors are likely to have favorably impacted the third-quarter results.

However, it has been witnessing a significant reduction in keg demand from the on-premise channel, and higher labor and safety-related costs at its breweries due to the impacts of coronavirus. Notably, reduction in internal capacity, shifting more volumes to third-party breweries have been leading to higher production costs due to the COVID-19 outbreak-related safety measures, which are likely to have a bearing on gross margin in the third quarter. Additionally, higher advertising, promotional and selling expenses along with increased general and administrative costs are expected to have remained a threat to its overall profitability.

Although it is making efforts to revive the Samuel Adams and Angry Orchard brands via packaging, innovation, promotion and brand communication initiatives, the soft performance is likely to have persisted in the quarter under review, more so because of the earlier store closures related to COVID-19.

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

Zacks Model

Our proven model does not 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Boston Beer has a Zacks Rank #1 and an Earnings ESP of -17.29%.

Stocks Likely to Deliver Earnings Beat

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:

Nu Skin Enterprises, Inc. NUS presently has an Earnings ESP of +3.54% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Newell Brands NWL currently has an Earnings ESP of +17.06% and a Zacks Rank #2.

Brown-Forman Corporation BF.B has an Earnings ESP of +0.97% and a Zacks Rank #2, at present.

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The Boston Beer Company, Inc. (SAM): Free Stock Analysis Report
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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.

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