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Will Supply Chain Woes Mar Boston Beer's (SAM) Q4 Earnings?
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The Boston Beer Company, Inc. (SAM - Free Report) is scheduled to report fourth-quarter 2021 results on Feb 16. The company is anticipated to register bottom-line growth in the to-be-reported quarter, while the top line is likely to decline year over year.
The Zacks Consensus Estimate for fourth-quarter earnings is pegged at $3.27 per share, suggesting a 27.7% growth from the year-earlier quarter's reported figure. The consensus mark has remained unchanged in the past 30 days. The consensus mark for 2021 earnings stands at $8.24 per share, indicating a decline of 43.9% from the year-earlier quarter's reported figure.
For quarterly revenues, the Zacks Consensus Estimate stands at $437.1 million, suggesting a 5.1% decrease from the prior-year quarter. The consensus mark for 2021 earnings is pegged at $2.2 billion, implying a 24.7% growth from the year-ago quarter's reported figure.
In the last reported quarter, the company delivered a negative earnings surprise of 26.5%. However, the company has a trailing four-quarter earnings surprise of 4.3%, on average.
The Boston Beer Company, Inc. Price and EPS Surprise
Boston Beer has been witnessing a persistent slowdown in the hard seltzer category, which has been hurting quarterly performance. The hard seltzer growth continues to be negatively impacted by several factors, including sluggish growth of household penetration as the market matures and new trails reduce. The demand has been impacted by the gradual transition to on-premise as hard seltzer, which has become a regular option in the channel. Higher operating costs, including advertising, promotional and selling expenses, might have weighed on the company’s profitability.
Last month, Boston Beer cited that stronger-than-anticipated supply-chain expenses, including costs of additional damaged and expired inventory stemming from reduced shipment volumes, may have acted as headwinds in the fourth quarter. These factors are likely to reduce gross margins for 2021.
On the call, Boston Beer forecast shipment growth for its products to be lower than earlier expectations, on account of a greater wholesaler inventory reduction, primarily hurting the Truly brand. Management stated that consumer demand has been robust and tracking at the upper-end of the earlier provided expectations. This is likely to have contributed to the depletion growth in the to-be-reported quarter and full-year 2021.
Driven by the aforementioned factors, the company updated its 2021 view. Boston Beer now anticipates depletion growth of 21-22%, shipment increase of 15-16% and the national price rise of 2-3% for 2021. Gross margin is projected between 38% and 40%. SAM predicts higher investments in advertising, promotional and selling expenses of $85-$95 million. This expense excludes freight costs changes for shipping products to the distributors.
Management had earlier predicted a depletion and shipment increase of 18-22%, with national price increase of 2-3% and a gross margin of 40-42%.
Consequently, management estimated 2021 earnings per share between a loss of $1 and a profit of $1, excluding the impact of ASU 2016-09. The revised view shows a decline from the earlier earnings guidance between $2 and $6 per share.
Boston Beer’s robust brand portfolio and strategic initiatives are likely to have cushioned results in the to-be-reported quarter. The company’s continued focus on pricing, product innovation, growth of non-beer categories alongside brand development is likely to have boosted its operational performance and position in the market. Its commitment to the three-point growth plan focused on reviving its Samuel Adams and Angry Orchard brands, cost-saving initiatives and innovation is expected to have contributed to the results.
Zacks Model
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 a Zacks Rank #3 and an Earnings ESP of 0.00%.
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:
Service Corporation International (SCI - Free Report) currently has an Earnings ESP of +17.39% and a Zacks Rank of 3. The company is likely to register an increase in the top line when it reports fourth-quarter 2021 numbers. The consensus mark for SCI’s quarterly earnings has moved up by a penny in the past 30 days to $1.00 per share. However, the consensus estimate suggests an 11.5% decline from the year-ago quarter’s reported number.
Service Corporation’s top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $1.01 billion, which suggests a rise of 4.3% from the figure reported in the prior-year quarter.
Hormel Foods (HRL - Free Report) currently has an Earnings ESP of +1.14% and a Zacks Rank of 3. The company is likely to register an increase in the top and bottom lines when it reports first-quarter fiscal 2022 results. The consensus mark for HRL's quarterly revenues is pegged at $2.87 billion, which suggests a rise of 16.6% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate has moved down 8.3% to 44 cents per share in the past 30 days. The consensus estimate indicates 7.3% growth from 41 cents reported in the year-ago quarter.
Lamb Weston (LW - Free Report) currently has an Earnings ESP of +3.91% and a Zacks Rank of 3. The company is likely to register top-line growth when it reports third-quarter fiscal 2022 earnings. The consensus mark for LW’s quarterly revenues is pegged at $971.7 million, which suggests an 8.5% growth from the figure reported in the prior-year quarter.
The consensus mark for quarterly earnings has moved down by a penny in the past 30 days to 45 cents per share. However, the consensus estimate for LW is expected to remain unchanged from the year-ago quarter.
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Will Supply Chain Woes Mar Boston Beer's (SAM) Q4 Earnings?
The Boston Beer Company, Inc. (SAM - Free Report) is scheduled to report fourth-quarter 2021 results on Feb 16. The company is anticipated to register bottom-line growth in the to-be-reported quarter, while the top line is likely to decline year over year.
The Zacks Consensus Estimate for fourth-quarter earnings is pegged at $3.27 per share, suggesting a 27.7% growth from the year-earlier quarter's reported figure. The consensus mark has remained unchanged in the past 30 days. The consensus mark for 2021 earnings stands at $8.24 per share, indicating a decline of 43.9% from the year-earlier quarter's reported figure.
For quarterly revenues, the Zacks Consensus Estimate stands at $437.1 million, suggesting a 5.1% decrease from the prior-year quarter. The consensus mark for 2021 earnings is pegged at $2.2 billion, implying a 24.7% growth from the year-ago quarter's reported figure.
In the last reported quarter, the company delivered a negative earnings surprise of 26.5%. However, the company has a trailing four-quarter earnings surprise of 4.3%, on average.
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 a persistent slowdown in the hard seltzer category, which has been hurting quarterly performance. The hard seltzer growth continues to be negatively impacted by several factors, including sluggish growth of household penetration as the market matures and new trails reduce. The demand has been impacted by the gradual transition to on-premise as hard seltzer, which has become a regular option in the channel. Higher operating costs, including advertising, promotional and selling expenses, might have weighed on the company’s profitability.
Last month, Boston Beer cited that stronger-than-anticipated supply-chain expenses, including costs of additional damaged and expired inventory stemming from reduced shipment volumes, may have acted as headwinds in the fourth quarter. These factors are likely to reduce gross margins for 2021.
On the call, Boston Beer forecast shipment growth for its products to be lower than earlier expectations, on account of a greater wholesaler inventory reduction, primarily hurting the Truly brand. Management stated that consumer demand has been robust and tracking at the upper-end of the earlier provided expectations. This is likely to have contributed to the depletion growth in the to-be-reported quarter and full-year 2021.
Driven by the aforementioned factors, the company updated its 2021 view. Boston Beer now anticipates depletion growth of 21-22%, shipment increase of 15-16% and the national price rise of 2-3% for 2021. Gross margin is projected between 38% and 40%. SAM predicts higher investments in advertising, promotional and selling expenses of $85-$95 million. This expense excludes freight costs changes for shipping products to the distributors.
Management had earlier predicted a depletion and shipment increase of 18-22%, with national price increase of 2-3% and a gross margin of 40-42%.
Consequently, management estimated 2021 earnings per share between a loss of $1 and a profit of $1, excluding the impact of ASU 2016-09. The revised view shows a decline from the earlier earnings guidance between $2 and $6 per share.
Boston Beer’s robust brand portfolio and strategic initiatives are likely to have cushioned results in the to-be-reported quarter. The company’s continued focus on pricing, product innovation, growth of non-beer categories alongside brand development is likely to have boosted its operational performance and position in the market. Its commitment to the three-point growth plan focused on reviving its Samuel Adams and Angry Orchard brands, cost-saving initiatives and innovation is expected to have contributed to the results.
Zacks Model
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 a Zacks Rank #3 and an Earnings ESP of 0.00%.
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:
Service Corporation International (SCI - Free Report) currently has an Earnings ESP of +17.39% and a Zacks Rank of 3. The company is likely to register an increase in the top line when it reports fourth-quarter 2021 numbers. The consensus mark for SCI’s quarterly earnings has moved up by a penny in the past 30 days to $1.00 per share. However, the consensus estimate suggests an 11.5% decline from the year-ago quarter’s reported number.
Service Corporation’s top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $1.01 billion, which suggests a rise of 4.3% from the figure reported in the prior-year quarter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Hormel Foods (HRL - Free Report) currently has an Earnings ESP of +1.14% and a Zacks Rank of 3. The company is likely to register an increase in the top and bottom lines when it reports first-quarter fiscal 2022 results. The consensus mark for HRL's quarterly revenues is pegged at $2.87 billion, which suggests a rise of 16.6% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate has moved down 8.3% to 44 cents per share in the past 30 days. The consensus estimate indicates 7.3% growth from 41 cents reported in the year-ago quarter.
Lamb Weston (LW - Free Report) currently has an Earnings ESP of +3.91% and a Zacks Rank of 3. The company is likely to register top-line growth when it reports third-quarter fiscal 2022 earnings. The consensus mark for LW’s quarterly revenues is pegged at $971.7 million, which suggests an 8.5% growth from the figure reported in the prior-year quarter.
The consensus mark for quarterly earnings has moved down by a penny in the past 30 days to 45 cents per share. However, the consensus estimate for LW is expected to remain unchanged from the year-ago quarter.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.