Belly up to the bar, investors. BostonBeer (NYSE:SAM) -- better known as Sam to its investors and consumers -- is ready to tap its earnings keg. Ice-cold earnings results for Q4 and full-year 2005 are due out tomorrow after close-of-market.

Wall Street Wisdom:

  • General consensus. Three analysts follow Boston Beer, but only one of them rates it a buy. The other two recommend nursing your beers for the time being.
  • Revenues. Analysts are calling for a 10% increase in quarterly sales, year over year, to $61.3 million.
  • Earnings. But Sam's customers apparently haven't been tipping too well. Profits are expected to fall 32% to $0.13 per share.

Margin watch:
Sam's been doing an awfully good job on the margins front, especially in light of the troubles that competing brewers such as Molson Coors (NYSE:TAP) and Motley FoolInside Value recommendation Anheuser-Busch (NYSE:BUD) have been encountering lately. Sam's boosted its gross margins by 100 basis points over the past 18 months, kept its operating margins steady (after recovering from an initial wobble), and grown its net (likewise).

Margins %

6/04

9/04

12/04

3/05

6/05

9/05

Gross

58.9

58.8

59.5

59.9

59.7

59.9

Op.

10.5

9.8

9

10.7

10.3

10.6

Net

6.7

6.3

5.8

6.9

6.8

7
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ending in the named months.

Foolish lookout:
As well as Sam, the business, has been holding up, it almost looks like the analysts have set Sam, the stock, up for a fall tomorrow. At last report, the company thought it could earn somewhere between $0.96 and $1.00 per share through the end of 2005. Wall Street, in contrast, is demanding $1.04 per share.

Granted, Sam set the bar especially low for itself -- as of last quarter, it had already tucked $0.91 per share under its belt, which should have made achieving $0.96 a snap. And I expect that hitting the analysts' target tomorrow is also doable.

Valuation metrics:
If Sam does in fact "miss estimates" tomorrow, things could get really ugly, really quick. Although the company's 24 P/E doesn't shock in the context of today's overall pricey market environment, this valuation is based on GAAP earnings that overstate the company's true cash profitability; Sam actually sells for 28 times free cash flow. Against an earnings growth rate projected to average 13% per annum long-term, that's one pricey bottle of beer on the Wall (Street).

Fool contributor Rich Smith does not own shares of any company named above.