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Boston Beer Co Inc Class A - Stock Quote SAM

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Morningstar's Boston Beer Co Inc Class A Stock Analysis

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With Inventory Rightsized Heading Into the Summer Season, Boston Beer Positioned for Improvement

Jaime M. Katz, CFA Senior Equity Analyst

Analyst Note

| Jaime M. Katz, CFA |

We don’t plan any material change to our $750 fair value estimate for narrow-moat Boston Beer after digesting first-quarter results that included an EPS loss of $0.16 and continue to view shares as attractive. Shipment volumes fell 25% to 1.7 million barrels, lapping more than 60% growth in the same period last year. We note, however, that volumes are still nearly 20% higher than first-quarter 2020 levels, despite inventory rationalization at retail. More importantly, we believe distributor inventories are clean heading into the summer season, at five weeks on hand (versus seven weeks last year), as the network cautiously rebuilds carry into the period. With net revenue declining 21% (but still up 30% over first-quarter 2020) and rampant supply chain and input cost inflation, Boston Beer’s gross margin was crushed, down 560 basis points to 40.2%. We don’t expect either of these issues to ameliorate imminently, which places our 2022 gross margin projection (47%) at risk.

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Boston Beer Co Inc Class A's Company Profile

Business Description

Boston Beer is a leader in U.S. high-end malt beverages and adjacent categories, with strong positions in craft beer, hard cider, and hard seltzer. The firm sells an array of flavor variants and package sizes, predominantly centered around four priority brands: Samuel Adams, Angry Orchard, Twisted Tea, and Truly Hard Seltzer. Its drinks are produced in both company-owned breweries as well as through third-party contract arrangements, and while the company primarily goes to market through independent wholesalers (as mandated by law), it operates a fairly large salesforce to induce demand across the value chain (distributors, retailers, and drinkers). The preponderance of revenue is generated domestically.

One Design Center Place, Suite 850
Boston, MA, 02210
T +1 617 368-5000
Sector Consumer Defensive
Industry Beverages - Brewers
Most Recent Earnings Mar 31, 2022
Fiscal Year End Dec 28, 2020
Stock Type Speculative Growth
Employees 2,543

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