A month has gone by since the last earnings report for Boston Beer (SAM Quick QuoteSAM - Free Report) . Shares have lost about 5.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Boston Beer due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Boston Beer Posts Q4 Loss, Beats Revenue Estimates

Boston Beer reported mixed fourth-quarter 2022 results, which gained from improvement in its depletion trends and continued strength across the Beyond Beer portfolio. However, sluggishness in the hard seltzer category's trajectory, unfavorable product mix and supply-chain inefficiencies affected the company in the quarter under review. Notably, the Twisted Tea brand continued to see double-digit growth, while hard seltzer remained drab.

Adjusted loss per share of 93 cents in fourth-quarter 2022 was wider than the year-ago quarter’s loss of 9 cents. The figure also lagged the Zacks Consensus Estimate of earnings of 72 cents and our estimate of earnings of 36 cents. This mainly resulted from increased supply-chain costs and higher operating expenses.

Net revenues improved 28.6% year over year to $447.5 million and beat the Zacks Consensus Estimate of $400 million. The figure also surpassed our estimate of $397.7 million. Excluding excise taxes, the top line rose 27.4% year over year to $476 million and came ahead of our estimate of $371.6 million.

The shipment volume rose 16.7% to 1.7 million barrels in the fourth quarter, driven by gains in the Truly Hard Seltzer, Twisted Tea, Hard Mountain Dew, Angry Orchard and Dogfish Head brands, partly negated by the decline in the Samuel Adams brand.

Depletions grew 3% in the fourth quarter on increases in the Twisted Tea and Hard Mountain Dew brands, offset by declines in the Truly Hard Seltzer, Angry Orchard, Samuel Adams and Dogfish Head brands.

The gross profit improved 66% year over year to $165.5 million, whereas the gross margin expanded 830 basis points to 37% from 28.7% in the year-ago quarter. The rise mainly resulted from increased costs recorded in fourth-quarter 2021 related to the slowdown in hard seltzer, as well as gains from pricing in fourth-quarter 2022. However, inflationary packaging, ingredient and energy costs, as well as higher inventory obsolescence costs and higher brewery processing acted as deterrents.

Advertising, promotional and selling expenses were up 1.1% in the reported quarter to $139.2 million due to elevated media costs, higher salary and benefit costs, somewhat offset by lower local marketing investments. General and administrative expenses increased 13.5% year over year to $41.6 million mainly due to increased salaries and benefits costs.

Financials

As of Dec 31, 2022, Boston Beer had cash and cash equivalents of $180.6 million, and total stockholders’ equity of $1,068.5 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.

In 2022, the company did not repurchase any shares of its Class A common stock. SAM repurchased $8.9 million in shares from Jan 3, 2023, to Feb 10, 2023. As of Feb 10, it had $81.5 million remaining in its existing share repurchase authorization worth $931 million. For 2023, capital spending is anticipated to be $100-$140 million.

Outlook

For 2023, Boston Beer envisions GAAP earnings per share of $6-$10. The company’s adjusted earnings per share guidance excludes the impacts of ASU 2016-09. Depletions and shipments are expected to decline 2-8%. This view includes the adverse impact of 1% due to the fact that fiscal 2022 had 53 weeks and fiscal 2023 will have 52 weeks. On a 52-week comparable basis, the company expects depletions and shipments to decline 1-7%.

SAM anticipates a gross margin of 41-43%. The company expects year-over-year gross margin improvement in the second half of 2023 due to the expected timing of cost-reduction efforts and the timing of obsolescence expense recognized in 2022. Advertising, promotional and selling expenses are expected between down $5 million and up $15 million in 2023. This does not include any change in freight costs. The non-GAAP effective tax rate is anticipated to be 28%, excluding the impacts of ASU 2016-09.

The Truly brand is predicted to show signs of improvement in the second half of this year. The 2023 overall volumes are likely to decline due to continued weakness in Truly volume, which is expected to partly offset strong growth in Twisted Tea.

For the first quarter of 2023, shipments are likely to be at the low-end of 2023 guidance, backed by the launch of Truly Margarita. Also, the company expects a loss for the aforementioned quarter.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

The consensus estimate has shifted -130.49% due to these changes.

VGM Scores

Currently, Boston Beer has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Boston Beer has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.