Craft Brew Alliance, Inc. (BREW - Free Report) is seeing robust sales growth as craft beer remains a top beverage choice with consumers. This Zacks Rank #1 (Strong Buy) recently reaffirmed full year guidance.

Craft Brew Alliance ("CBA") is the 5th largest craft brewer in the United States. It operates breweries and brew pubs across the U.S. and produces several well known brands, including Kona Brewing Company, Appalachian Mountain Brewery, Cisco Brewers, Omission Brewing Co., Redhook Brewery, Square Mile Cider Co., and Widmer Brothers Brewing.

Kona is Hawaii's oldest craft beer, established in 1994.

The company is headquartered in Portland, Oregon.

A Beat in the First Quarter

On May 3, CBA reported its first quarter results and beat the Zacks Consensus Estimate by 9 cents. Earnings were a loss of $0.09 versus the consensus of a loss of $0.18.

Net sales rose 13% to $44.3 million.

Kona, a top 10 national craft beer brand, is the cornerstone of the company's strategy.

In the first quarter it saw 14% depletion growth despite strong craft beer competition in the market which has pressured overall craft beer sales. This growth included 60% growth in international depletion. Big Wave Golden Ale was the driving force in the quarter, with a 33% gain in depletions.

CBA also launched Hanalei Island IPA which was the top 11th new craft beer launched in the quarter as measured in grocery sales by Nielsen.

While it is an independent craft brewer, it has relationships with the big boys including Anheuser-Busch.

It has successfully completed the qualification process to begin brewing in their Fort Collins, Colorado brewery and will begin shipments shortly. This brewery is more efficient than its production at City Brewing in Memphis and at its Woodinville brewery, both which are being wound down.

CBA's shipments in the wholesale market also saw growth, rising 2.1% year-over-year, while gross margins jumped by 640 basis points to 28.6% compared to the first quarter of last year.

Reaffirmed Full Year Guidance in a Tough Market

There are a LOT of craft brewers in America now. All of that inventory is making market conditions tough, even for a bigger player like CBA.

It has been working to reduce costs by closing inefficient breweries. The results of those changes are seen in the first quarter results.

For the full year, it expects total depletion change of flat to growth of 6%.

Its gross margin is also forecast to improve further to a range of 30.5% to 32.5%.

“We saw a 45% increase in gross profitability versus last year which was supported by strong topline growth, healthy revenues per barrel sold, and improved brewery efficiencies,” said Joe Vanderstelt, CFO.

“The upcoming closure of our Woodinville brewery in July will allow us to take another step forward in reducing fixed overhead costs, increasing gross margins, and improving capacity utilization," he added.

There's only one estimate for the company on Zacks.com but that estimate has been adjusted upwards in the last 30 days.

The company is expected to lose $0.05, up from a loss of $0.13 just 30 days ago. It's also expected to be profitable in 2018 as the Zacks Consensus is looking for $0.14.

Shares Bounce Off Earnings Beat

This is a small cap company with a market cap of just $321 million. For that reason, not many investors are familiar with it despite it being in one of the hottest food and beverage categories of the last 10 years.

Still, the shares got a boost off the earnings beat.

They don't trade with a P/E yet because they're not profitable.

But for investors who are fans of craft beer and want to invest in the industry, CBA is a stock that should be on your short list.