Why Boston Beer Stock Plunged Today

stock boston beer (fountain -18.53%) Makers of Sam Adams beer, Truly Hard Seltzer and other spirits continued a recent pattern by falling lower Wednesday after reporting disappointing fourth-quarter results.

Boston beer tastes sour

Earnings continued to move in the wrong direction during the fiscal quarter, with revenue down 12% (3.1% on a 13-week comparable basis) to $393.7 million, well below expectations of $413.8 million. (An additional week was added in the company’s fiscal 2022 fourth quarter, complicating direct comparisons.) Depletion, which measures end-consumer demand based on unit sales from distributors to retailers, was up 9% year over year and 1% over 13 weeks. decreased. Comparable standards.

Management noted a continued decline in Truly hard seltzer sales due to lower sales, but this was offset by increased sales of Twisted Tea, Sam Adams non-alcoholic beverages and Dogfish Head canned cocktails.

Gross margin increased to 37.6% from 37%, driven by higher prices and lower procurement costs, even as the company continues to face headwinds from contract shortfalls in third-party production capacity contracts.

Bottom line, the company reported a loss of $1.49 per share in a seasonally weak quarter, which was worse than consensus estimates for a loss of $0.25 per share and a loss of $0.93 per share in the year-ago quarter.

“As we look forward to 2024, we believe we have the right strategy to continue to improve our revenue and margin performance while continuing to invest in our brands and industry-leading sales force,” Chairman Jim Koch said on the earnings call.

What’s next for Boston Beer?

The company said depletions have decreased by 2% so far this year and that it expects depletions and shipments to be virtually flat for the year ahead. It is also calling for a price increase of 1 to 2 percent, which would imply a slight increase in revenue, and provides guidance for generally accepted accounting principles (GAAP) earnings per share of $7 to $11. This is a significant improvement over the $6.21 per share reported for 2023, but still below the $11.39 per share predicted by the average analyst.

At expected profit levels, Boston Beer stock still looks expensive. Current valuations imply a recovery that has yet to materialize.