Shares of The Boston Beer Company (NYSE: SAM) surged to a new 52-week high Friday morning, after the brewmaster reported a third-quarter profit of $10.4 million, or 72 cents per share, on revenue of $108.7 million. The company swung to a loss of 2 cents per share in the third quarter of 2008, but attributed its turnaround to strong shipments and decreased advertising expenses.
The results were better than analysts expected, with consensus estimates calling for Boston Beer to bank a profit of 39 cents per share on $107.5 million. Looking forward, Boston Beer now expects full-year earnings of $1.75 per share to $2.05 per share, a marked increased from its prior forecast for a 2009 profit of $1.40 per share to $1.70 per share.
As a result of the upside surprise, SAM is more than 10% higher at last check. The equity recently pulled back to support from its 20-week and 80-day moving averages, and these two trendlines served as a springboard Friday to launch the shares higher. The stock tapped an intraday peak of $42.25, exceeding its previous 52-week high by a matter of mere pennies.
With 5% of SAM's float sold short, the rally could have staying power if the bears feel spooked. This accumulation of shorted shares translates to roughly 14.1 days' worth of potential buying pressure at the equity's average daily trading volume.
However, the more firmly entrenched pessimists will likely hold their ground until SAM can manage a weekly close or two above the $40 level, which has acted as stubborn resistance since August. In the intervening months, the security has notched just one weekly finish north of this round-number region.
Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.
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