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Boston Beer (SAM) Q1 Earnings: Will the Stock Disappoint?


The Boston Beer Company, Inc. SAM is scheduled to release first-quarter fiscal 2017 results on Apr 26. The big question facing investors is whether this leading craft brewing company will be able to deliver a positive earnings surprise in the quarter to be reported.

Boston Beer posted a positive earnings surprise of 47.1% in the last reported quarter, while it has a mixed surprise trend for the trailing four quarters. The Zacks Consensus Estimate for both, first-quarter and 2017 remained unchanged, over the last 30 days. However, the current Zacks Consensus Estimate of 26 cents for the first quarter reflects a year-over-year slump of 50.3%. Moreover, analysts polled by Zacks expect revenues of $173.6 million, down 8.1% from the year-ago quarter.

Boston Beer Company, Inc. (The) Price and EPS Surprise

Boston Beer Company, Inc. (The) Price and EPS Surprise | Boston Beer Company, Inc. (The) Quote

Factors Influencing this Quarter

Boston Beer’s shares plunged 21.6% over the past one year, underperforming the Zacks categorized Beverages – Alcohol industry’s dip of 1.1%.

Though Boston Beer’s fourth-quarter 2016 earnings were strong, the company witnessed challenging depletions throughout 2016, which has been a major hurdle in its performance. The softness in depletion trends was mainly due to general weakness in the craft beer and cider categories, alongside a troubled retail backdrop owing to increased launch of new beers. The competition has intensified as new craft brewers are entering the market and existing ones are expanding their distribution and tapping capacities, providing more options for consumers. Further, the soft depletion trends continued into 2017, as evident from the depletions through the six weeks period ended Feb 11, 2017. Additionally, it declined nearly 15% from the year-ago period.

Based on these trends, the company remains uncertain about volumes and profitability for 2017. Thus, following its last quarterly results, the company provided soft earnings per share forecast for 2017, and lowered depletions and shipments view for the year. All said, we remain somewhat apprehensive about the company’s outcome this time around.

Earnings Whispers

Our proven model does not conclusively show that Boston Beer is likely to beat on estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below:

Zacks ESP: Boston Beer currently has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 26 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Boston Beer currently carries a Zacks Rank #4 (Sell). We caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

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:

McDonald's Corporation MCD, expected to report earnings on Apr 28, currently has an Earnings ESP of +3.79% and a Zacks Rank #3.

Sprouts Farmers Market, Inc. SFM, scheduled to release earnings on May 4, currently has an Earnings ESP of +3.45% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Red Robin Gourmet Burgers, Inc. RRGB, expected to release earnings on May 16, currently has an Earnings ESP of +40.35% and a Zacks Rank #3.

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