Why Boston Beer's Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Boston Beer (NYSE: SAM  ) jumped 15% today after the company increased earnings guidance.

So what: Management said that it expected 2012 earnings to be between $4.30 and $4.60 per share, up from an earlier view of $3.80 to $4.20. Analysts had expected earnings of $4.34 per share.  

The company also said it expects depletions, or the amount of beer sold, to grow 10% to 15% next year, up from an earlier forecast of high single digits.

Now what: The high-end beer business is clearly running on all cylinders right now, and there's more Sam Adams flying off the shelf than expected. The strong operations are very encouraging for the business, but I'm still having trouble buying this stock at the current price. After the pop, shares trade at 31 times the high end of earnings estimates, a steep price if depletions are growing at 15% or less per year.

Take a deeper look
Can Boston Beer rise above the rest, or will it be squeezed between small local breweries on one side and global beer giants on the other? To help you decide, we've compiled a premium research report filled with everything you need to know about Boston Beer's risks and opportunities. Just click here now to find out whether Boston Beer is a buy today.


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