The following is what I submitted as a writing sample as I attempt to get a spot in The Motley Fool‘s Writer Development Program for July. Enjoy!
Boston Beer? I’ll Drink to Them!
Despite coming up just short analyst predictions for their recent quarterly earnings, Boston Beer Company (NYSE: SAM), the brewer of Samuel Adams and other craft beers, is still a solid company in which to invest, not to mention they provide a great product to help you deal with drunken (pun intended) swings of the market.
Some Numbers
On March 8, Boston Beer Company released their earnings for the fourth quarter of 2010. While not terrible, they nonetheless were slightly off from analyst predictions. Boston Beer posted earnings of 87 cents a share versus expectations of 90 cents a share, and revenues of $115.7 million against expected revenue of $118.5 million.
These earnings showed a dramatic increase over earnings from the same quarter in 2009. The earnings reported show an increase of 35 cents per share over from the fourth quarter of 2009, and net revenue was an 8% gain. For the twelve months that ended December 25, 2010, net revenue increased 12% to $463.8 million, and earnings per share were $3.52, an increase of $1.35 per share over 2009.
It’s Pronounced “Cook”
Jim Koch, Chairman and Founder of the Company, is optimistic for the future performance of the company: “While we continue to see expanded distribution of domestic specialty brands and local craft brands, which is increasing competition in the category, we are happy with the health of our brand portfolio.” This brand portfolio includes their “flagship” beer, Samuel Adams Boston Lager, as well as numerous others under the Samuel Adams label.
Since 1988, Boston Beer has participated in a buyback program with its distributors to ensure that only the freshest products remain on the shelves for customers to buy. To improve this program, Boston Beer is expanding its “Freshest Beer Program,” which substantially reduces both the time and temperature the beer experiences in wholesaler warehouses prior to reaching the market. They expect expansion of this program will unfavorably impact earnings per share by 20 to 30 cents next year, but are still estimating earnings between $3.45 and $3.95 per share.
With a 52-week range of $47.44 to $100.93, I would be willing to wager that it will stay closer to the top of the range than the bottom from its current price. It is a brand that has many loyal drinkers, including me, and should be a welcome addition to any fridge… er, portfolio.
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