Boston Beer Company: Earnings Fall But the Future’s Still Bright

A handful of brewing companies can be said to make up the bedrock of the craft beer industry. A quick glance at the industry shows you companies like Redhook, Sierra Nevada, Dogfish Head and of course Boston Beer Company. For the brewer of Samuel Adams, success has been enormous. That might not be the story for much longer though. The company recently posted their earnings for first quarter of 2011 and they were drastically different than in years past.

Falling Shares

The first thing that an observer will notices is the fact that shares in Sam Adams dropped by almost 13% in the tail end of the first quarter. Earnings per share also dropped a bit, with investors realizing $3.70 per share rather than the $3.81 per share projected. While that might not seem like much, it certainly adds up in a very short time.

Profit Loss

Earnings are the measure of success for any company. Sam Adams has traditionally enjoyed very strong earnings regardless of what the market might have thrown at the brewery. That was not the case this time and earnings plunged by 36% over what they were at the same time in 2010. That was a nasty shock to investors, which contributed to the drop in shares on the market after investors moved away.

Not as Bad as It Seems

While the information above might make it seem as though Sam Adams is having a very tough time of it this year, that’s really not the case. The company is still enjoying remarkable performance for a small brewery and the rate of earnings revisions has dropped considerably. That is a good sign that things are picking back up and that Boston Beer Co. still enjoys the loyalty of their solid investor base.

Jim Koch is optimistic about the company’s performance and points to the earnings revisions drop as a sign of strong sales and support. He also points to new beers that will be hitting the market that will entice even more customers to make Sam Adams their preferred beverage – styles like their new Sam Adams Seasonals lineup, their new Rustic Saison, East-West Kolsch and their Latitude 48 Deconstructed brews.

While Sam Adams might have hit a rough patch early in 2011, most experts believe that the company will still pull through the rest of the year with an exceptional financial outlook.

Posted on June 21, 2011 .