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Why Boston Beer Stock Jumped 25.4% in February

By Steve Symington - Updated Apr 11, 2019 at 9:13PM

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The market celebrated a strong quarter and the upcoming launch of three new brands.

What happened

Shares of Boston Beer ( SAM 5.14% ) climbed 25.4% in February, according to data from S&P Global Market Intelligence, after the craft brewer followed strong fourth-quarter 2018 results with plans for several new healthcentric brands.

Boston Beer stock soared nearly 14% on Feb. 21, 2019, alone -- the first trading day after its quarterly report hit the wires. In it, Boston Beer revealed that its fourth-quarter revenue rose 9.2% to $225.2 million, while earnings arrived at $21.8 million, or $1.86 per share. Analysts, on average, were only expecting earnings of $1.70 per share on revenue closer to $223 million.

Boston Beer's Samuel Adams bottles

Image source: Boston Beer.

So what

As we've seen in each of the past several quarters, Boston Beer's top-line growth was driven by strength from its Truly Hard Seltzer, Twisted Tea, and Angry Orchard brands. However, Boston Beer's flagship Samuel Adams brand has continued to see falling sales amid what Boston Beer's founder and chairman, Jim Koch, described as "challenges across the industry, including a general softening of the craft beer category."

Still, Koch also noted the company's new ad campaign has "noticeably improved" trends for its Boston Lager beer. And on a consolidated basis, Boston Beer achieved a 6.3% year-over-year increase in shipment volume, to 958,000 barrels, as well as 11% growth in depletions (an industry metric to show how quickly its products travel from warehouses to consumer outlets).

Check out the latest earnings call transcript for Boston Beer.

Now what

What's more, Boston Beer also announced the impending broad launches of three new health-focused brands -- including 26.2 Brew to fit runners' lifestyles, Wild Leaf Hard Tea, and Tura Alcoholic Kombucha, all promising sources of incremental sales as the company works to return Samuel Adams to sustained growth.

In the meantime, Boston Beer told investors to expect 2019 adjusted earnings per share of between $8.00 and $9.00, up from $7.82 per share in 2018 and roughly in line with analysts' consensus estimates at the time. 

With the stock down nearly 20% from its 52-week high leading into that report, coupling that solid outlook with Boston Beer's relative outperformance to end 2018 gave investors more than enough reason to bid up shares last month. And if Boston Beer can sustain this momentum into the new year with the help of its new brands, I think the stock has plenty of room to continue bubbling higher going forward.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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