The Boston Beer Company (SAM) is a Zacks Rank #5 (Strong Sell) after the company missed the Zacks Consensus Estimate when the company last reported. While this company is broadly know for its line of beers like Samuel Adams, they also make the popular hard seltzer Truly.  This article will look at why this stock is a Zacks Rank #5 (Strong Sell) as it is the Bear of the Day.

Description                       

Boston Beer Co., Inc. engages in the production and sale of alcoholic beverages. Its brands include Truly Hard Seltzer, Twisted Tea, Samuel Adams, Angry Orchard, Hard Cider, and Dogfish Head Craft Brewery. The company was founded by C. James Koch in 1984 and is headquartered in Boston, MA.

Earnings History

When I look at a stock, the first thing I do is look to see if the company is beating the number.  This tells me right away where the market’s expectations have been for the company and how management has communicated to the market.  A stock that consistently beats has management communicating expectations to Wall Street that can be achieved.  That is what you want to see.

In the case of The Boston Beer Company (SAM) I a pattern of beating, then missing, then beating and missing Zacks Consensus Estimate over the last year. The most recent quarter was a miss with the company posting a loss of $1.68 when the consensus was calling for a loss of $1.18.  This alone does not make the stock a Zacks Rank #1 (Strong Buy) and it doesn’t make it a Zacks Rank #5 (Strong Sell) either.

The Zacks Rank does care about the earnings history, but it is much more heavily influenced by the movement of earnings estimates.

Earnings Estimates

The Zacks Rank tells us which stocks are seeing earnings estimates move higher or in this case lower.  For SAM I see annual estimates moving lower of late.

The current fiscal year consensus number moved lower from $11.94 to $10.87 over the last 60 days. 

The next year has moved from $13.88 to $12.52 over the last 30 days.

Negative movement in earnings estimates like that is why this stock is a Zacks Rank #5 (Strong Sell).

It should be noted that a lot of stocks in the Zacks universe are seeing negative earnings estimate revisions.  That means that the stocks that are seeing small but negative earnings estimate revisions are falling to a Zacks Rank #5 (Strong Sell).

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The Boston Beer Company, Inc. (SAM) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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