Boston Beer (SAM)

Beer company Boston Beer (NYSE:SAM) missed Wall Street’s revenue expectations in Q3 CY2025, with sales falling 11.2% year on year to $537.5 million. Its non-GAAP profit of $4.25 per share was 27.4% 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 sales performance is one signal of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.

With $1.98 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 struggled to increase demand as its $1.98 billion of sales for the trailing 12 months was close to its revenue three years ago. This shows demand was soft, a poor baseline for our analysis.

This quarter, Boston Beer missed Wall Street’s estimates and reported a rather uninspiring 11.2% year-on-year revenue decline, generating $537.5 million of revenue.

Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months. This projection doesn't excite us and indicates its newer products will not accelerate its top-line performance yet.

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 45.8% gross margin over the last two years. That means for every $100 in revenue, only $54.18 went towards paying for raw materials, production of goods, transportation, and distribution.

This quarter, Boston Beer’s gross profit margin was 50.8%, marking a 4.5 percentage point increase from 46.3% in the same quarter last year. Boston Beer’s full-year margin has also been trending up over the past 12 months, increasing by 3.8 percentage points. If this move continues, it could suggest better unit economics due to some combination of stable to improving pricing power and input costs (such as raw materials).

Operating margin is a key profitability metric because it accounts for all expenses enabling a business to operate smoothly, including marketing and advertising, IT systems, wages, and other administrative costs.

Boston Beer’s operating margin might fluctuated slightly over the last 12 months but has remained more or less the same, averaging 5.7% 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, which doesn’t help its cause.

This quarter, Boston Beer generated an operating margin profit margin of 11.5%, up 4 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 Q3, Boston Beer reported adjusted EPS of $4.25, down from $5.36 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. Over the next 12 months, Wall Street expects Boston Beer’s full-year EPS of $10.18 to grow 2.9%.

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 9.6% 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 2.1 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 $89.24 million in Q3, equivalent to a 16.6% margin. This cash profitability was in line with the comparable period last year and above its two-year average.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative 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 7.3%, 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 $250.5 million of cash and $40.9 million of debt on its balance sheet. This $209.6 million net cash position is 10.1% 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.

We were impressed by how significantly Boston Beer blew past analysts’ EBITDA expectations this quarter. We were also glad its gross margin outperformed Wall Street’s estimates. On the other hand, its revenue slightly missed. Overall, we think this was a decent quarter with some key metrics above expectations. The stock remained flat at $198.28 immediately following the results.

Updated: December 17, 2025 at 9:44 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 isn’t one of our picks. To kick things off, its revenue has declined over the last three years, and analysts don’t see anything changing over the next 12 months. And while its EPS growth over the last three years has been fantastic, the downside is its brand caters to a niche market. On top of that, its projected EPS for the next year is lacking.

Boston Beer’s P/E ratio based on the next 12 months is 19.2x. Investors with a higher risk tolerance might like the company, but we don’t really see a big opportunity at the moment. We're pretty confident there are superior stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $241.01 on the company (compared to the current share price of $198.28).

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.