The Boston Beer Company, Inc. (SAM – Free Report) is scheduled to report second-quarter 2023 results on Jul 27. In the second quarter, the company is anticipated to have registered top and bottom-line declines from the prior-year quarter’s reported figures.
The Zacks Consensus Estimate for earnings is pegged at $3.45 per share, suggesting a decline of 20% from the year-ago quarter’s reported figure. The consensus mark has declined 3.9% in the past seven days. For quarterly revenues, the Zacks Consensus Estimate is pegged at $598.8 million, suggesting a 2.8% decline from the prior-year quarter’s reported number.
In the last reported quarter, SAM delivered a negative earnings surprise of 128.1%. It has a trailing four-quarter negative earnings surprise of 88.7%, on average.
Key Factors to Note
Boston Beer has been witnessing declines in shipments and depletions, as well as continued challenges in the hard seltzer category. This has been weighing on the company’s top-line performance. For the second quarter of 2023, the company anticipated shipments to be at the low end of the company’s 2023 guidance of a 2-8% decline, backed by the launch of Truly Margarita.
Our model estimates shipment volumes to decline 4.1% in the second quarter. Depletions for the second quarter are expected to be down 1%.
On the last reported quarter’s earnings call, management indicated that the company’s second quarter results would remain sensitive to changes in volume projections, mostly related to the hard seltzer category, supply-chain performance and inflationary impacts. It anticipated slowed hard seltzer sales to mainly impact SAM’s Truly hard seltzer performance, which is expected to continue through the first half of 2023.
Continued headwinds from increased costs are expected to have marred the bottom-line performance in the to-be-reported quarter. Inflationary packaging, ingredient and energy costs, elevated inventory obsolescence costs, and higher brewery processing have been weighing on the gross margin in recent quarters.
Sluggishness in the hard seltzer category, an unfavorable product mix and supply-chain inefficiencies are expected to have affected Boston Beer’s performance in the quarter under review. Further, higher advertising, promotional and selling expenses are likely to have continued spoiling its performance.
We expect the second-quarter adjusted operating margin to decline 300 basis points to 8.7%, driven by a 60-bps increase in advertising, promotional and selling expenses.
However, continued strength across the Beyond Beer portfolio is likely to have aided its performance in the to-be-reported quarter. Beyond Beer is growing faster than the traditional beer market, and SAM expects this trend to continue for the next several years. Gains of this trend are likely to get reflected in the company’s second-quarter results.
SAM’s continued focus on pricing, product innovation, growth of non-beer categories and brand development is likely to have boosted its operational performance and position in the market. Its focus on innovation to revive the Truly brand and expand Twisted Tea’s potential bodes well. As part of product innovation, the company expects to improve the Truly brand trends through a renewed focus on core business, smart brand innovation, and strong distributor support and retail execution.
Boston Beer’s commitment to the three-point growth plan — focus on reviving its Samuel Adams and Angry Orchard brands, cost-saving initiatives and innovation — is expected to have contributed to its quarterly performance.
What Does the Zacks Model Say?
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 an Earnings ESP of -1.22% and a Zacks Rank #3 at present.
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.
Molson Coors (TAP – Free Report) has an Earnings ESP of +12.96% and currently sports a Zacks Rank of 1. It is likely to register top and bottom-line growth when reporting second-quarter 2023 results. The consensus mark for TAP’s quarterly revenues is pegged at $3.21 million, which suggests 10% growth from the prior-year quarter’s reported figure.
The consensus mark for Molson Coors’ quarterly earnings is pegged at $1.49 per share, suggesting growth of 25.2% from the year-ago quarter’s reported figure. The estimate has moved up 4.9% in the past seven days. TAP has delivered an earnings surprise of 32.1%, on average, in the trailing four quarters.
Church & Dwight Co. (CHD – Free Report) currently has an Earnings ESP of +1.39% and a Zacks Rank of 2. It is likely to register increases in the top and bottom lines when reporting second-quarter 2023 results. The Zacks Consensus Estimate for quarterly revenues is pegged at $1.4 billion, implying a rise of 7.3% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for Church & Dwight’s quarterly earnings is pegged at 79 cents per share, suggesting an increase of 4% from the year-ago quarter’s reported number. The estimate has been unchanged in the past 30 days. CHD has delivered an earnings surprise of 9.8%, on average, in the trailing four quarters.
Coca-Cola (KO – Free Report) currently has an Earnings ESP of +2.00% and a Zacks Rank of 3. It is likely to register increases in the top and bottom lines when reporting second-quarter 2023 results. The Zacks Consensus Estimate for KO’s quarterly earnings has moved up by a penny in the past 30 days to 72 cents per share, indicating growth of 2.9% from the year-ago quarter’s figure.
The Zacks Consensus Estimate for Coca-Cola’s quarterly revenues is pegged at $11.7 billion, suggesting growth of 3.6% from the prior-year quarter’s reported figure. KO has delivered an earnings surprise of 4.2%, on average, in the trailing four quarters.
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