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Why Boston Beer's Shares Dropped 10.3% on Thursday

By Travis Hoium - Feb 18, 2021 at 3:18PM

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Sometimes growth isn't enough.

What happened 

Shares of Boston Beer (SAM 3.43%) fell as much as 10.3% in trading on Thursday after the company reported fourth-quarter 2020 results. Shares ended the day down 7.8%. 

So what

Revenue was up an impressive 53.5% to $460.9 million and net income jumped 135.7% to $32.8 million, or $2.64 per share. Analysts were only expecting $453.2 million in revenue and earnings of $2.62 per share, so results easily topped that bar. 

Beer being poured at a bar.

Image source: Getty Images.

For the full year, revenue was up 38.9% to $1.74 billion and earnings per share were $15.53. But it's when we get to outlook that investors were a little disappointed. Management expects depletions to grow between 35% and 45% with earnings of $20 to $24 per share. Analysts were expecting earnings of $22.71 per share and revenue growth of 37%. Outlook wasn't out of line with those expectations, but when a stock trades for 46 times the high end of forward earnings estimates, it's not surprising to see expectations at a peak. 

Now what

Taking a step back, there's a lot to like about Boston Beer's results. The company is growing like crazy and its brands are clearly meeting the market's needs for both beer and hard seltzer. With growth expected to continue in 2021, this is a company built to do well long term. But its valuation is very rich, and that's something the market is taking a harder look at today. 

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Stocks Mentioned

The Boston Beer Company, Inc. Stock Quote
The Boston Beer Company, Inc.
SAM
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