Boston Beer Company (SAM, Financial) has reiterated its full-year financial guidance for 2025, initially shared in its February earnings release, factoring in the adverse effects of tariffs which are expected to cost the company between $20 million and $30 million. This translates to an estimated reduction in earnings per diluted share by $1.25 to $1.90, alongside a negative impact on the gross margin ranging from 50 to 100 basis points.
While the company acknowledges that these projections could vary significantly due to fluctuations in volume forecasts, supply chain performance, inflation, and tariff impacts, it laid out several expectations for 2025. The firm's business reveals a seasonal pattern, with the first and fourth quarters typically demonstrating lower volumes, and the fourth quarter generally recording the lowest absolute gross margin rates.
In terms of shipments, Boston Beer anticipates that second-quarter shipment growth will be higher than the first quarter's year-over-year figures, though still surpassing depletion trends. However, this trend is expected to reverse in the second half of the year, particularly during the third quarter.
Additionally, the company projects that shortfall fees will reduce the gross margin by 60 to 80 basis points, while non-cash expenses related to third-party production pre-payments could further diminish margins by 40 to 60 basis points. Advertising, selling, and promotional expenses are expected to rise primarily in the first half of 2025, with freight costs not yet included in these projections. Any benefit from the cessation of CEO transition costs in 2024 is anticipated to be negated by increased incentive compensation in 2025.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 15 analysts, the average target price for Boston Beer Co Inc (SAM, Financial) is $265.05 with a high estimate of $349.00 and a low estimate of $210.00. The average target implies an upside of 9.34% from the current price of $242.40. More detailed estimate data can be found on the Boston Beer Co Inc (SAM) Forecast page.
Based on the consensus recommendation from 16 brokerage firms, Boston Beer Co Inc's (SAM, Financial) average brokerage recommendation is currently 2.9, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Boston Beer Co Inc (SAM, Financial) in one year is $361.54, suggesting a upside of 49.15% from the current price of $242.4. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Boston Beer Co Inc (SAM) Summary page.
SAM Key Business Developments
Release Date: February 25, 2025
- Revenue: Slight year-over-year increase, driven by shipments down 2% and two points of price realization.
- Gross Margin: Expanded by 200 basis points to 44.4%; excluding contractual prepayments and shortfall fees, it was 46.1%.
- Non-GAAP EPS: Increased 31% year-over-year to $9.43.
- Free Cash Flow: $173 million or $14.70 per share.
- Share Repurchases: $239 million in shares repurchased in 2024.
- Fourth Quarter Revenue: Increased 2.2% due to price increases and lower returns.
- Fourth Quarter Gross Margin: 39.9%, increased 230 basis points year-over-year.
- Advertising, Promotional, and Selling Expenses: Increased by 8.5% year-over-year in Q4.
- General and Administrative Expenses: Increased by 9.1% year-over-year in Q4.
- Contract Settlement Costs: $26 million or $1.70 per share in Q4.
- Non-GAAP Loss Per Diluted Share: $1.68 in Q4, excluding contract settlement costs.
- 2025 Guidance - Gross Margin: Expected between 45% and 47%.
- 2025 Guidance - Earnings Per Diluted Share: Targeting between $8.10 and $8.50.
- 2025 Capital Expenditures: Expected between $90 million and $110 million.
- Cash Balance: $212 million at the end of the quarter.
- Share Repurchase Authorization Remaining: Approximately $398 million as of February 21, 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Boston Beer Co Inc (SAM, Financial) achieved a 31% growth in non-GAAP EPS, supported by a 200 basis point expansion in gross margin.
- The company generated $173 million in free cash flow, allowing for $239 million in share repurchases in 2024.
- Twisted Tea continues to grow its market share, holding an 84% share in the hard tea category and contributing significantly to the category's dollar growth.
- The national expansion of Sun Cruiser is underway, with positive performance in initial markets and plans to triple distribution points by mid-2025.
- Boston Beer Co Inc (SAM) is investing in advertising and marketing to support brand growth, with a focus on innovation and expanding market share.
Negative Points
- The hard seltzer category is facing headwinds, with category dollars down 4% in the fourth quarter.
- Depletions in the fourth quarter were flat, and shipments decreased by 0.5% from the prior year.
- The company anticipates potential volatility in the volume environment due to dynamic consumer demand.
- Increased advertising investments are expected to dampen 2025 operating income growth.
- The company faces challenges from increased competition in the 'beyond beer' category and potential impacts from health and wellness trends.
