SAM down 41.5% from its all time high but at first glance I don't see a problem in the financial statements. A P/E of 21.5 is not too high for a fast grower but maybe SAM got ahead of itself in 2013 and 14.http://invest.kleinnet.com/bmw1/stats16/SAM.htmlI've added SAM to my fast grower watch list.Denny Schlesinger
....what ails SAM?...Maybe it's that one of the first "craft brewers" and now one of the biggest, is having done to it what it did to the "big boys"; that is, the tons of new smaller craft beers are stealing more market share from SAM than the biggies.Cheers!MurphHome Fool(expert beer/ale drinker; not an expert on beer/ale stocks)
I had a limit order for SAM that did not fill. But there's a lot to like about the company: relatively low P/E at the moment, a decent, steady profit margin, increasing sales at about a 14% clip but is estimated to slow to about 6%, and diminishing numbers of shares outstanding (over the last 10 years). The big companies have consolidated dramatically, and SAM is a very small potato compared to the biggies - by a market cap of 100 to 1 for SAM vs BUD. SAM is in virtually every market and liquor store and enjoys ample shelf space. It's debt is very low in contrast to BUD which is 54% debt to total cap. The one worry of mine, aside from the growth of craft brewers (that are everywhere!) is the high "short" position against the company. And sales for BUD have been in a decline for two years now.
That's an interesting one Denny! Beer sounds good and hadn't realized SAM had been growing so fast!
I too was surprised by the fast and sustained growth. If there is nothing wrong with the company it should be a great investment once it bottoms. That's the reason for my question: "What ails SAM?"Denny Schlesinger
Interesting.In my initial look, I found this article on earnings which was published around the time the stock peaked:http://www.fool.com/investing/general/2015/02/25/why-boston-...Quarterly revenue rose 6% year over year to $217.8 million, which translated to a 5.5% increase in net income to $19.1 million, or $1.40 per share. Analysts, on average, were expecting slightly lower earnings of $1.37 per share on higher sales of $236 million. Depletions growth during the quarter also decelerated sequentially from 21% to 13%. (Depletions is an industry measure for how quickly the company's products travel from warehouses to consumer outlets.) But keep in mind management already warned this was an expected result stemming from more difficult year-over-year comparisons and a lack of new product launches in the second half of 2014. For the full year, depletions grew a solid 22%, within Boston Beer's guidance range of 20%-24%......Driving those results, Boston Beer says, will be depletions growth of between 8%-12% -- a reduction from the 10%-15% range Boston Beer forecast three months ago.....We should also keep in mind Boston Beer's penchant for under-promising and over-delivering, which means analysts are likely to take its lighter-than-expected guidance with a grain of salt....And from here:http://www.fool.com/investing/general/2015/03/14/why-boston-...There are two main drivers behind Boston Beer's soft 2015 forecast: more competition and fewer product launches. The company is losing market share to both big and small brewers as competition heats up in the craft beer industry. That shouldn't come as a surprise. While Boston Beer had a massive hit with its Angry Orchard franchise, it was only a matter of time before other brewers elbowed into the cider business.Meanwhile, the company is taking a breather from its souped-up product introduction pace of the last two years. After rolling out new national brands including Sam Adams Rebel IPA and Sam Adams Cold Snap in 2014, management has no plans for another big launch this year, and instead will focus on building up sales for existing products. The absence of a new beer brand to goose revenue in the short term is behind the anticipated slowing of depletion growth.MR
Here's some more:http://www.fool.com/investing/general/2015/10/30/boston-beer...That bottom-line growth was driven by the increase in revenue, healthier gross margin (up 90 basis points year over year to 53.6%), and lower income taxes, but partially offset by planned increases in advertising, promotional, and selling expenses. Recall three months ago, Boston Beer told investors it would attempt to combat decelerating depletions growth -- a key measure for how quickly its products travel from warehouses to consumer outlets -- by introducing new packaging and advertising in the second half of 2015.Of course, that did't seem to work.Similar to last quarter, Boston Beer's founding chairman, Jim Koch, opted to be the bearer of bad news: "Our total company depletion trends of 6% in the third quarter of 2015 matched our year to date trends, but represent a slowing from our expectations, primarily as a result of weakness in our Samuel Adams brand due to increased competition and a slowing in the cider category."Oops! And furthermore:What is new, however, are the cautious words surrounding the typically strong cider category, which notably includes Boston Beer's Angry Orchard brand and has effectively offset softness in other segments in each of its past two quarters.Boston Beer CEO Martin Roper elaborated:During the third quarter, we [...] saw a slowing of the cider category, but believe Angry Orchard maintained its share even as competitors continue to enter or increase investment. We remain positive about the long term cider category potential, but short term growth is less certain. We are planning continued investments in advertising, promotional and selling expenses, as well as in innovation, commensurate with the opportunities and the increased competition that we see.andAt the same time, Boston Beer continues to wisely invest in supply chain improvements with the aim of enhancing customer service and further increasing the freshness of its products. Despite some "glass bottle supply challenges" in Q3, Roper insists Boston Beer's service level continued to show improvements.And Boston Beer has no intention of letting those investments lapse as it grows its still-tiny slice of the overall beer market. As per usual, Roper reiterated his decidedly (capital-F Foolish) statement, "[W]e continue to be prepared to forsake the earnings that may be lost as a result of these investments in the short term, as we pursue long term profitable growth."It's looking like SAM was a fast grower like AAPL, but then ran out of innovative ideas. And it seems SAM, for now isn't entirely sure how to get things back on track. If the stock can get back onto it's former growth path, the shares are cheap. But if not, it may have further to fall. In short, competition is eating them alive, they are losing market share (have been for several quarters actually), and they need to innovate to begin growing again. The other question is, are they too big to continue being the niche craft brewer they are known as with so many other niche craft brewers invading the space? Or, maybe they will just be acquired by a bigger fish. There's always that. Until there's some solid sign of a turnaround, I'd stick to just watching this one...MR
Here's an interesting bio of SAM's co-founder, Jim Koch. http://www.notablebiographies.com/newsmakers2/2004-Di-Ko/Koc...
Thanks for the feedback, guys! I agree that SAM needs to be watched to see when it bottoms and if it resumes the growth progression. When management has to throw money at sales it's not a good sign. The best sale is when the customer demands the product.I'm having a Polar Solera Light with lunch!https://www.google.com/search?q=Solera+Light+beer&num=50...Denny Schlesinger
That large short position on SAM concerns me. 20%+... that's a lot of shares that are expecting it to drop further.
I think the issue is what was stated earlier. SAM sold as a craft brew against the old line Beers, now local Craft Beers are displacing it
Beishma, the short position is a symptom, not a cause.Denny Schlesinger
As one of my favorite buy signals, I like to use the weekly RSI TA indicator, which is somewhat akin to the BMW Method in that it measures the movements of a stock relative to its own history. I've had SAM on my watch list for a few years now, waiting for a potential buy signal, and I'm getting it now, but haven't been able to bring myself to pull the trigger. This often happens--I'll wait a long time for a buy signal on a stock, but then when it happens, the news is so discouraging that it's hard to bite the bullet and buy. I've missed some good opportunities that way. As with the BMW Method, the trick is to discern what companies will turn around vs. those that won't.My hesitation is that to me, SAM has a mediocre product relative to the mushrooming competition from smaller, local craft brews (not that that ever stopped SBUX!). But it still may have a niche to keep growing and dominate. Will it? I'm hesitating to say yes.
SAM down 41.5% from its all time high but at first glance I don't see a problem in the financial statements.Is the problem simply with guidance? Looks like expectations are for a 10% drop in sales YoY in Q2.
Just read the Morningstar analyst's report. I suggest reading that before you buy. Many headwinds for SAM. One tidbit is that the number of craft brewers, from 2008 - 2015 have more than doubled: from 1875 to 4000. In addition, the majors have been issuing their own craft lines (Blue Moon, et al). SAM has a 2% market share. I know that local brewers here in Raleigh have much snob appeal, and, to an extent, Sam Adams is old news. I dunno. It may not deserve the still high P/E it enjoys. The analyst gives it a "narrow moat" rating and it sounds as though he's being generous. Incidentally, the article said that AB and BUD have had lower revenue for a few years running - something like 2%.
I know that local brewers here in Raleigh have much snob appealYou should try Asheville then!Ant
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