Will Beyond Meat Stock See Further Declines?

Beyond Meat stock (NASDAQ
NDAQ
: BYND), a plant-based meat alternative company, is scheduled to report its fiscal second-quarter results on Monday, August 7. We expect BYND’s stock to likely trade lower due to revenues and earnings missing expectations in its second-quarter results. Up almost 30% this year from $12 to $16, the company’s stock has managed to grow amid a combination of inflation, pandemic-related shifts in demand, and rising competition. But still, Beyond Meat’s
BYND
stock remains under pressure as revenue continues to fall and solvency concerns persist. There are a number of headwinds that continue to pressure BYND stock going forward. In the U.S., the company’s distribution has maxed out, while inventory levels remain high. Moreover, the company is dealing with low utilization of plants, lower revenue per pound, and termination of co-manufacturing agreements. The company also has a substantial amount of debt in its capital structure, which may become a meaningful risk factor in the current high-interest rate environment. BYND has $1.1 billion in debt on its balance sheet and a limited cash runway of $258.6 million (down from $310 million at year-end 2022). BYND is guiding toward a $375-$415 million revenue in 2023, implying a 1% to 10% year-over-year (y-o-y) drop. That said, the company’s revenue growth is expected to accelerate in the second half due to the introduction of new products, distribution expansion, and weaker year-ago comparisons.

Our forecast indicates that BYND’s valuation is $11 per share, which is almost 29% lower than the current market price. Look at our interactive dashboard analysis on Beyond Meat Earnings Preview: What To Expect in Fiscal Q2? for more details.

(1) Revenues expected to come slightly below consensus estimates

Trefis estimates BYND’s Q2 2023 revenues to be around $104 Mil, slightly below the consensus estimate. The company saw declining volumes along with falling prices in Q1. The company’s net Q1 revenue of $92 million was down almost 16% y-o-y. BYND’s U.S. Retail volume plunged 33% y-o-y to $8.3 million pounds, U.S. Foodservice volume saw a 7% decline to 2.6 million pounds, and International retail volumes fell 6% to 3.3 million pounds. The only bright spot was International Foodservice, where volumes rose 115% to 5.5 million pounds.

(2) EPS is also likely to miss consensus estimates

BYND’s Q2 2023 earnings per share is expected to come in at a loss of 93 cents per Trefis analysis, missing the consensus estimate. In Q2, BYND’s net loss was $97 million, or 66% of sales. Beyond Meat’s gross margin turned negative in 2022 compared to its positive gross margins of 25% in 2021 and 30% in 2020. While the company’s gross margins improved in Q1 to 6.7%, much of that gain was on accounting function as the life of some of its manufacturing equipment was increased in the quarter. The company has a heavy focus on marketing and promotional activities, which doesn’t bode well for its margins.

(3) Stock price estimate is lower than the current market price

Going by our BYND’s valuation, we expect a revenue per share estimate of around $6.12 and a P/S multiple of 1.9x in fiscal 2023, translating into a price of $11, which is almost 29% lower than the current market price.

It is helpful to see how its peers stack up. BYND Peers shows how Beyond Meat’s stock compares against peers on metrics that matter. You will find other useful comparisons for companies across industries at Peer Comparisons.

What if you’re looking for a portfolio that aims for long-term growth? Here’s a value portfolio that’s done much better than the market since 2016.

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