What happened

Shares of Sam Adams brewer The Boston Beer Company (SAM -1.97%) popped their top on Friday, surging 17.6% through 1 p.m. ET after beating earnings last night.

Expected by Wall Street analysts to earn a pro forma profit of $3.07 per share on sales of $567.8 million, Boston Beer instead ended up earning $2.21 per share when calculated according to generally accepted accounting principles (GAAP). Plus $1.61 per share in non-cash impairment charges, that equals $3.82 per share, pro forma, with sales coming in at $596.5 million.  

So what

Sales for the quarter climbed 6% year over year, with shipment volume increasing a bit more than 1%. Management noted that deliveries of the company's Twisted Tea, Hard Mountain Dew, and Samuel Adams brands were strong, while deliveries of Truly Hard Seltzer, Angry Orchard, and Dogfish Head beer were weaker.  

Overall, "strong pricing performance" helped Boston Beer reverse last year's Q3 loss -- which was largely caused by a decline in the popularity of hard seltzer drinks -- and deliver a profit this year. Gross profit margin for Q3 2022 surged 1,250 basis points to 43.2%.

With these numbers in the bag, and less than a quarter to go before the year ends, Boston Beer tightened its guidance range through the end of fiscal 2022. Management now expects its prices to rise 4% to 5% for the year as a whole, with shipments declining only 4% to 7% for the year as a whole. Gross profit margin will be a bit weaker than hoped -- 42% to 43.5%. But management still expects to end the year with GAAP profits per share of $5.39 to $8.39, and pro forma profits ranging from about $7 to $10.

Now what

Is that good enough to make Boston Beer stock a buy? Investors today clearly think it does, but I'm not so sure. Consider that even valued on its pro forma profits projection, at $10 a share in earnings, Boston Beer stock would be selling for more than 39 times this year's earnings -- a P/E ratio roughly twice the market average. Valued on less-forgiving GAAP earnings, even if Boston Beer maxes out its guidance range at $8.39 per share, the P/E shoots up to about 47 times earnings.

Call me a skeptic, but that seems quite a lot to pay for a beer company with flat-to-declining shipping volumes, even if it is raising prices a bit on its brews. Investors bidding up Boston Beer stock so strongly today, I suspect, may have been sampling their own product a bit too freely.