Boston Beer Earnings: Volume and Margin Trends Encouraging but Hard Seltzer Remains a Drag

We plan to maintain our $350 fair value estimate on narrow-moat Boston Beer after absorbing its results in the seasonally small first quarter. Sales were up 4% on positive shipment volume and pricing trends, while EPS of $1.04 was a marked improvement from a $0.73 loss a year ago. We maintain our 2024 estimate for a 1% sales growth and EPS of $9.87 as we incorporate a flattish volume outlook given weakness in hard seltzer (still one fifth of total volume, by our estimate) and stepped-up investments in product innovation and marketing. Our 10-year projection for mid-single-digit sales compound annual growth rate and a low-teens average operating margin remains in place. We continue to see shares as undervalued following a 6% pop in April 25 after-hours trading.