Boston Beer (SAM)

Beer company Boston Beer (NYSE:SAM) met Wall Street’s revenue expectations in Q2 CY2025, with sales up 1.5% year on year to $587.9 million. Its GAAP profit of $5.45 per share was 36.4% above analysts’ consensus estimates.

Company Overview

Known for its flavorful beverages challenging the status quo, Boston Beer (NYSE:SAM) is a pioneer in craft brewing and a symbol of American innovation in the alcoholic beverage industry.

These companies' performance is influenced by brand strength, marketing strategies, and shifts in consumer preferences. Changing consumption patterns are particularly relevant and can be seen in the rise of cannabis, craft beer, and vaping or the steady decline of soda and cigarettes. Companies that spend on innovation to meet consumers where they are with regards to trends can reap huge demand benefits while those who ignore trends can see stagnant volumes. Finally, with the advent of the social media, the cost of starting a brand from scratch is much lower, meaning that new entrants can chip away at the market shares of established players.

Competitors include Anheuser-Busch Inbev (NYSE:BUD), Constellation Brands (NYSE:STZ), and Molson Coors (NYSE:TAP) along with international companies such as Asahi, Carlsberg, and Heineken.

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.

With $2.05 billion in revenue over the past 12 months, Boston Beer is a small consumer staples company, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with retailers.

As you can see below, Boston Beer’s sales grew at a sluggish 1.6% compounded annual growth rate over the last three years. This shows it failed to generate demand in any major way and is a rough starting point for our analysis.

This quarter, Boston Beer grew its revenue by 1.5% year on year, and its $587.9 million of revenue was in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months, a slight deceleration versus the last three years. This projection is underwhelming and indicates its products will face some demand challenges.

Boston Beer has great unit economics for a consumer staples company, giving it ample room to invest in areas such as marketing and talent to grow its brand. As you can see below, it averaged an excellent 45.1% gross margin over the last two years. That means for every $100 in revenue, only $54.86 went towards paying for raw materials, production of goods, transportation, and distribution.

Boston Beer produced a 49.8% gross profit margin in Q2, up 3.7 percentage points year on year and exceeding analysts’ estimates by 6.1%. Boston Beer’s full-year margin has also been trending up over the past 12 months, increasing by 2.7 percentage points. If this move continues, it could suggest better unit economics due to more leverage from its growing sales on the fixed portion of its cost of goods sold (such as manufacturing expenses).

Boston Beer’s operating margin might fluctuated slightly over the last 12 months but has generally stayed the same, averaging 5.6% over the last two years. This profitability was mediocre for a consumer staples business and caused by its suboptimal cost structure.

Analyzing the trend in its profitability, Boston Beer’s operating margin might fluctuated slightly but has generally stayed the same over the last year. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Boston Beer generated an operating margin profit margin of 14%, up 1.7 percentage points year on year. Since its gross margin expanded more than its operating margin, we can infer that leverage on its cost of sales was the primary driver behind the recently higher efficiency.

Revenue trends explain a company’s historical growth, but the change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

In Q2, Boston Beer reported EPS at $5.45, up from $4.40 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Boston Beer’s full-year EPS of $7.11 to grow 37.6%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Boston Beer has shown robust cash profitability, driven by its attractive business model that enables it to reinvest or return capital to investors. The company’s free cash flow margin averaged 10.2% over the last two years, quite impressive for a consumer staples business. The divergence from its underwhelming operating margin stems from the add-back of non-cash charges like depreciation and stock-based compensation. GAAP operating profit expenses these line items, but free cash flow does not.

Taking a step back, we can see that Boston Beer’s margin expanded by 1.3 percentage points over the last year. This shows the company is heading in the right direction, and we can see it became a less capital-intensive business because its free cash flow profitability rose while its operating profitability was flat.

Boston Beer’s free cash flow clocked in at $112.2 million in Q2, equivalent to a 19.1% margin. This result was good as its margin was 6 percentage points higher than in the same quarter last year, building on its favorable historical trend.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Boston Beer historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 8%, somewhat low compared to the best consumer staples companies that consistently pump out 20%+.

Companies with more cash than debt have lower bankruptcy risk.

Boston Beer is a profitable, well-capitalized company with $212.4 million of cash and $43.86 million of debt on its balance sheet. This $168.6 million net cash position is 7.4% of its market cap and gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.

Although revenue was in line with expectations, we were impressed by how significantly Boston Beer blew past analysts’ EBITDA expectations this quarter due to better profitability. We were also glad its EPS outperformed Wall Street’s estimates. Operating and free cash flow margin were up noticeably from the same period last year. On the other hand, its full-year EPS guidance missed. Overall, this print had some key positives. The stock traded up 8% to $218 immediately after reporting.

Updated: December 4, 2025 at 9:43 PM EST

When considering an investment in Boston Beer, investors should account for its valuation and business qualities as well as what’s happened in the latest quarter.

Boston Beer isn’t a terrible business, but it doesn’t pass our bar. To kick things off, its revenue growth was weak over the last three years, and analysts expect its demand to deteriorate over the next 12 months. And while its EPS growth over the last three years has been fantastic, the downside is its projected EPS for the next year is lacking. On top of that, its brand caters to a niche market.

Boston Beer’s P/E ratio based on the next 12 months is 23.2x. At this valuation, there’s a lot of good news priced in - we think there are better opportunities elsewhere.

Wall Street analysts have a consensus one-year price target of $243.15 on the company (compared to the current share price of $194.14).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.