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Category: Stock Market and Boston Beer Company (SAM)
Date: 24 July 2020 Stock Price of Boston Beer Company: $659.23 We take a look at the 1st quarter earnings report of their 2020 fiscal year of craft beer company and owner of brands such as Samuel Adams and newly acquired Dogfish Head. The group's revenue increased by 42% for the quarter compared to the same quarter of the previous year and the number of beer barrels sold increased by 39.8% to 1 921 barrels sold in the quarter.
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As the world continues to grapple with the COVID-19 pandemic, our primary focus continues to be on operating our breweries and our business safely and supporting our partners in the beer industry.- Jim Koch, Chairman and Founder of the Company "
About Boston Beer Company (SAM)
The Boston Beer Company, Inc. (NYSE: SAM) began in 1984 brewing Samuel Adams beer and the Samuel Adams brand is currently recognized as one of the largest and most respected craft beer brands. Our portfolio of brands also includes Angry Orchard Hard Cider, Twisted Tea, Truly Hard Seltzer, Wild Leaf Hard Tea and Tura Alcoholic Kombucha as well as other craft beer brands such as Angel City Brewery, Coney Island Brewing, and Concrete Beach Brewery. On July 3, 2019, the Company completed its previously reported Dogfish Head Brewery transaction. Dogfish Head has a proud history as a craft beer pioneer with a brand that is beloved by American consumers and highly respected by the industry.
Quick facts about Boston Beer Company (SAM) which all refers to fiscal year end 2019:
Quick facts about Boston Beer Company (SAM) which all refers to fiscal year end 2019:
- Boston Beer Company is listed on the New York Stock Exchange under share code ticker: SAM
- Owns Samuel Adams
- Owns Dogfish Head
- Owns Twisted Tea
- Sales for 2019 fiscal year: $1.249 billion
- 2 128 employees as at end December 2019
- Earnings per share of Boston Beer Company in 2019 fiscal year: $9.16
- Shares in issue: 11.908 million
- Number of stockholders: 8 477
- Number of barrels sold: 5 307
- Net revenue per barrel: $235.51
Overview of Boston Beer Company (SAM) 2nd quarter 2020 earnings report
The data below refers to the latest quarter's data (unless specified otherwise)
- Revenues: $481.089 million (up from $338.643 million for the same quarter of the previous year)
- Revenues increased by 42.1% over the last 12 months
- Cost of goods sold: $242.514 million (up from $159.405 million for the same quarter of the previous year)
- Cost of goods increased by 52.1% over the last 12 months
- Some margin squeeze on Boston Beer Company is revenues grew at a rate a lot slower than their cost of goods sold.
- Net income: $60.141 million (up from $27.856 million for the same quarter of the previous year)
- Diluted earnings per share: $4.88 (up from $2.36 for the same quarter of the previous year)
- PE ratio of Boston Beer Company: 33.7
- Number of shares in issue: 12.258 million (up from 11.684 million for the same period of the previous year)
- Cash and cash equivalents: $86.716 million
- Cash and cash equivalents per share: $7.07
- Cash and cash equivalents makes up 1% of Boston Beer Company's market capital
- Cash and cash equivalents makes up 7.2% of Boston Beer Company's total assets
- Inventories: $105.523 million
- Inventories makes up 8.99% of Boston Beer Company's total assets
- Goodwill in Boston Beer Company: $112.529 million
- Goodwill per share: $9.18
- Goodwill makes up 9.3% of Boston Beer Company's total assets
- Total stockholders equity in Boston Beer Company: $827.283 million
- Stockholders equity per share in Boston Beer Company: $67.49
- Boston Beer Company is trading at 9.76 times its stockholders equity per share which is outside the expected range of between 2 and 4 times that most firms tend to trade at
- For perspective the S&P 500 has an average price to book of 3.7. Read more about the S&P 500 here.
Boston Beer Company (NYSE: SAM) management commentary on 2nd quarter 2020 earnings
BOSTON, July 23, 2020 /PRNewswire/ -- The Boston Beer Company, Inc. (NYSE: SAM) reported second quarter 2020 net revenue of $452.1 million, an increase of $133.7 million or 42.0%, from the same period last year. Net income for the second quarter was $60.1 million, an increase of $32.3 million or 116% from the same period last year. Earnings per diluted share were $4.88, an increase of $2.52 per diluted share from the second quarter of 2019. This increase was primarily due to increased revenue driven by shipment growth of 39.8%, partially offset by lower gross margins and increases in operating expenses.
Jim Koch, Chairman and Founder of the Company, commented, "As the world continues to grapple with the COVID-19 pandemic, our primary focus continues to be on operating our breweries and our business safely and supporting our partners in the beer industry. Supporting the communities in which we work and live is one of our core values and we are very happy that our Samuel Adams Restaurant Strong Fund has raised $5.4 million thus far to support bar and restaurant workers who are experiencing hardships in the wake of COVID-19. Working with the Greg Hill Foundation, this Fund is committed to distributing 100% of its proceeds through grants to bar and restaurant workers across the country. We achieved depletions growth of 46% in the second quarter, of which 42% is from Boston Beer legacy brands and 4% is from the addition of Dogfish Head brands. I am tremendously thankful for the efforts of our coworkers in achieving our ninth consecutive quarter of double-digit growth, while maintaining a focus on quality and innovation. We are also thankful to our outstanding distributors and retailers for their focus during COVID-19. Our business in the second quarter was strong, but uncertainties due to COVID-19 remain. These uncertainties include our ability to continue to operate our breweries at a level of safety that meets our standards, the continued ability to distribute to off-premise retail locations, and the timing of the re-opening of on-premise retail locations. We will continue to work hard throughout the COVID-19 pandemic and prioritize safety above all else. I am very proud of the passion, creativity and commitment to community that our company has demonstrated during this pandemic. We remain positive about the future growth of our brands and are happy that our diversified brand portfolio continues to fuel double-digit growth."
Jim Koch, Chairman and Founder of the Company, commented, "As the world continues to grapple with the COVID-19 pandemic, our primary focus continues to be on operating our breweries and our business safely and supporting our partners in the beer industry. Supporting the communities in which we work and live is one of our core values and we are very happy that our Samuel Adams Restaurant Strong Fund has raised $5.4 million thus far to support bar and restaurant workers who are experiencing hardships in the wake of COVID-19. Working with the Greg Hill Foundation, this Fund is committed to distributing 100% of its proceeds through grants to bar and restaurant workers across the country. We achieved depletions growth of 46% in the second quarter, of which 42% is from Boston Beer legacy brands and 4% is from the addition of Dogfish Head brands. I am tremendously thankful for the efforts of our coworkers in achieving our ninth consecutive quarter of double-digit growth, while maintaining a focus on quality and innovation. We are also thankful to our outstanding distributors and retailers for their focus during COVID-19. Our business in the second quarter was strong, but uncertainties due to COVID-19 remain. These uncertainties include our ability to continue to operate our breweries at a level of safety that meets our standards, the continued ability to distribute to off-premise retail locations, and the timing of the re-opening of on-premise retail locations. We will continue to work hard throughout the COVID-19 pandemic and prioritize safety above all else. I am very proud of the passion, creativity and commitment to community that our company has demonstrated during this pandemic. We remain positive about the future growth of our brands and are happy that our diversified brand portfolio continues to fuel double-digit growth."
Dave Burwick, the Company's President and CEO stated, "Our depletions growth in the second quarter was a result of increases in our Truly Hard Seltzer and Twisted Tea brands and the addition of the Dogfish Head brands that were only partially offset by decreases in our Samuel Adams and Angry Orchard brands. The growth of the Truly brand, led by Truly Hard Lemonade, has accelerated and continues to grow beyond our expectations. Since early January, Truly has grown its velocity and its market share sequentially while other national, regional and local hard seltzer brands have entered the category. Truly is the only hard seltzer, not introduced earlier this year, to grow its share during 2020. We will continue to invest heavily in the Truly brand and work to improve our position in the hard seltzer category as competition continues to increase. We are excited about our new Truly advertising campaign that showcases colors, variety and joy to hard seltzer drinkers through four spots, but we have been deliberately slow to roll out this campaign given the consumer environment surrounding COVID-19 and it is too early to know if it will resonate with drinkers. Twisted Tea continues to generate double-digit volume growth rates that are well above full-year 2019 trends. We expect to increase our brand investments in the second half compared to the first half and see significant distribution and volume growth opportunities for our Truly, Twisted Tea and Dogfish Head brands. Samuel Adams and Angry Orchard's volumes continue to decline, as they are more deeply impacted by the effect of COVID-19 on on-premise retailers. We are encouraged that Samuel Adams Boston Lager and Angry Orchard Crisp Apple both have experienced double-digit growth in the measured off-premise channels during the quarter. We continue to work on returning these brands to growth, but do not expect them to grow during 2020 because of on-premise closures. I am pleased that our overall business has shown great momentum and depletion improvements during the first half of the year. Given our trends for the first half and our current view of the remainder of the year, we've adjusted our expectations for higher 2020 full-year earnings, depletions and shipment growth, which is primarily driven by the strong performance of our Truly and Twisted Tea brands."
Mr. Burwick continued, "We have adjusted our business to the COVID-19 environment and continue to work to control what we can control, with our primary focus being the safety of our coworkers, distributors, retailers and drinkers. We have deployed many safety protocols across our business and at our breweries, including entrance screening and temperature checks, face mask requirements, reorganized work spacing to increase physical distancing between and among shifts, and adding more cleaning and sanitation time to each shift. We are slowly re-opening our hospitality locations, which were closed since March, with a focus on outdoor service and takeout. Our accelerated depletions growth has been challenging operationally. We have been experiencing out of stocks and we expect wholesaler inventories to remain very tight for the rest of the summer. We have been operating at capacity for many months and have further increased our usage of third-party breweries in response to the growth. In particular, the additional Truly volumes have come at a higher incremental cost, due to an increased usage of third-party breweries, which is negatively impacting our gross margin expectation for the year. We are investing significantly in our supply chain, but do not expect these pressures to be relieved in the second half of the year. We will continue to invest to increase capacity, as appropriate to meet the needs of our business and take full advantage of the fast-growing hard seltzer category. We're in a very competitive business, but we are optimistic for continued growth of our current brand portfolio. We remain prepared to forsake short-term earnings as we invest to sustain long-term profitable growth, in line with the opportunities that we see."
Depletion Estimates
Year-to-date depletions through the 28-week period ended July 11, 2020 are estimated by the Company to have increased approximately 42% from the comparable period in 2019. Excluding the Dogfish Head impact, depletions are estimated to have increased approximately 37%.
Outlook
The Company currently projects full year 2020 earnings per diluted share to be between $11.70 and $12.70. This projection excludes the impact of ASU 2016-09. The Company's actual 2020 earnings per share could vary significantly from the current projection. Underlying the Company's current 2020 projection are the following full-year estimates and targets:
Mr. Burwick continued, "We have adjusted our business to the COVID-19 environment and continue to work to control what we can control, with our primary focus being the safety of our coworkers, distributors, retailers and drinkers. We have deployed many safety protocols across our business and at our breweries, including entrance screening and temperature checks, face mask requirements, reorganized work spacing to increase physical distancing between and among shifts, and adding more cleaning and sanitation time to each shift. We are slowly re-opening our hospitality locations, which were closed since March, with a focus on outdoor service and takeout. Our accelerated depletions growth has been challenging operationally. We have been experiencing out of stocks and we expect wholesaler inventories to remain very tight for the rest of the summer. We have been operating at capacity for many months and have further increased our usage of third-party breweries in response to the growth. In particular, the additional Truly volumes have come at a higher incremental cost, due to an increased usage of third-party breweries, which is negatively impacting our gross margin expectation for the year. We are investing significantly in our supply chain, but do not expect these pressures to be relieved in the second half of the year. We will continue to invest to increase capacity, as appropriate to meet the needs of our business and take full advantage of the fast-growing hard seltzer category. We're in a very competitive business, but we are optimistic for continued growth of our current brand portfolio. We remain prepared to forsake short-term earnings as we invest to sustain long-term profitable growth, in line with the opportunities that we see."
Depletion Estimates
Year-to-date depletions through the 28-week period ended July 11, 2020 are estimated by the Company to have increased approximately 42% from the comparable period in 2019. Excluding the Dogfish Head impact, depletions are estimated to have increased approximately 37%.
Outlook
The Company currently projects full year 2020 earnings per diluted share to be between $11.70 and $12.70. This projection excludes the impact of ASU 2016-09. The Company's actual 2020 earnings per share could vary significantly from the current projection. Underlying the Company's current 2020 projection are the following full-year estimates and targets:
- Depletions and shipments percentage increase of between 27% and 35% of which between 1% and 2% of this growth is due to the addition of the Dogfish Head brands.
- National price increases of between 1% and 2%.
- Gross margin of between 46% and 48%.
- Increased investment in advertising, promotional and selling expenses of between $70 million and $80 million. This does not include any changes in freight costs for the shipment of products to the Company's distributors.
- Non-GAAP effective tax rate of approximately 26%, excluding the impact of ASU 2016-09.
- Estimated capital spending of between $180 million and $200 million, which could be higher, if deemed necessary to meet future growth.
Boston Beer Company (NYSE: SAM) stock price history
The image below obtained from Google, shows the stock price history of Boston Beer Company over the last 5 years. And its been a very good time for Boston Beer Company. 5 years ago the stock of Boston Beer Company was trading at around $224 a stock and its currently trading at $659.23 a stock. That's a decent return of 194% provided to Boston Beer Company stockholders over the last 5 years.
The stock of Boston Beer Company is trading at a lot closer to its 52 week high of $697 than it is to its 52 week low of $290.02 a stock, which to us is a clear indication that the short term sentiment and momentum of Boston Beer Company stock is positive at this point in time. And the stock of Boston Beer Company was up 7% in after hours trade following the release of their latest results. So it might have a very positive trading day today, 24 July 2020
The stock of Boston Beer Company is trading at a lot closer to its 52 week high of $697 than it is to its 52 week low of $290.02 a stock, which to us is a clear indication that the short term sentiment and momentum of Boston Beer Company stock is positive at this point in time. And the stock of Boston Beer Company was up 7% in after hours trade following the release of their latest results. So it might have a very positive trading day today, 24 July 2020
Boston Beer Company (SAM) vs Molson Coors (TAP) vs Constellation Brands (STZ)
The image below shows the stock price performance of Boston Beer Company (SAM), Molson Coors (TAP) and Constellation Brands (STZ) over the last 3 years. While all three firms are active in the brewing and distillery space their stock price performance is vastly different even though they are all operating in the same sector. Below the stock price returns of the three brewers over the last 3 years.
Boston Beer Company's stock has easily outperformed that of its peers
- Boston Beer Company (SAM): 341.10%
- Constellation Brands (STZ): -8.05%
- Molson Coors (TAP): -59.68%
Boston Beer Company's stock has easily outperformed that of its peers
Recent coverage of Boston Beer Company (SAM)
The extract below discusses the latest regarding Boston Beer Company (SAM) as obtained from Marketwatch.com
Boston Beer Co. shares SAM, -0.73% jumped more than 5% in the extended session Thursday after the maker of Sam Adams and other alcoholic beverages reported an unexpected doubling of profit from the year before amid the COVID-19 pandemic. Chief Executive Dave Burwick credited "increases in our Truly Hard Seltzer and Twisted Tea brands and the addition of the Dogfish Head brands" for some of the demand gains. The company reported second-quarter net income of $60.1 million, or $4.88 a share, compared with $27.9 million, or $2.36 a share, in the year-ago period. Revenue rose to $452.1 million from $318.4 million in the year-ago quarter. Analysts surveyed by FactSet had forecast earnings of $2.34 a share on revenue of $426.2 million. Boston Beer now expects full-year earnings of $11.70 to $12.70 a share, while analysts on average had forecast 2020 earnings of $9.84 a share.
Read the full article here
Boston Beer Co. shares SAM, -0.73% jumped more than 5% in the extended session Thursday after the maker of Sam Adams and other alcoholic beverages reported an unexpected doubling of profit from the year before amid the COVID-19 pandemic. Chief Executive Dave Burwick credited "increases in our Truly Hard Seltzer and Twisted Tea brands and the addition of the Dogfish Head brands" for some of the demand gains. The company reported second-quarter net income of $60.1 million, or $4.88 a share, compared with $27.9 million, or $2.36 a share, in the year-ago period. Revenue rose to $452.1 million from $318.4 million in the year-ago quarter. Analysts surveyed by FactSet had forecast earnings of $2.34 a share on revenue of $426.2 million. Boston Beer now expects full-year earnings of $11.70 to $12.70 a share, while analysts on average had forecast 2020 earnings of $9.84 a share.
Read the full article here
Boston Beer Company (NYSE: SAM) stock valuation
So what do we value Boston Beer Company stock at after the release of their 1st quarter 2020 earnings? Based on Boston Beer Company earnings report our valuation models provides a target (full value) price for Boston Beer Company at $388.90 a stock (up strongly from our 1st quarter 2020 earnings review of Boston Beer Company) . We therefore believe that the stock of Boston Beer Company is overvalued.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $388.90. Therefore we believe a good entry point into Boston Beer Company stock is at $350 or below. We expect the stock of Boston Beer Company to pull back from current levels to levels closer to our target price (full value price) in coming weeks and moths as we believe it is significantly overvalued at this point in time.
We therefore rate Boston Beer Company stock as a sell
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $388.90. Therefore we believe a good entry point into Boston Beer Company stock is at $350 or below. We expect the stock of Boston Beer Company to pull back from current levels to levels closer to our target price (full value price) in coming weeks and moths as we believe it is significantly overvalued at this point in time.
We therefore rate Boston Beer Company stock as a sell
Next earnings release of Boston Beer Company (SAM)
It is expected that Boston Beer Company will publish their 3rd quarter 2020 earnings report in late October 2020