Is it time to nibble on some Beyond Meat (BYND) stock? The plant-based meat giant has lost some of its sizzle this past six months, falling some 13%, while the S&P has risen almost 30% during that span. The decline has been due to a combination of factors.
Aside from the fact that Beyond Meat continues to post quarterly operating losses, there are increased fears of emerging competitive pressures from, among others, Impossible Foods, which is gearing up to for its IPO. What’s more, the company’s once-torrid growth pace has moderated in recent quarters, which has brought on concerns about profitability. But ahead if its first quarter fiscal 2021 earnings results Thursday, the market might have gotten too pessimistic about the company’s near-term growth prospects.
Beyond Meat’s business conditions may soon improve, according to analyst Peter Saleh at BTIG who has cited the company's high-profile partnerships with, among others, McDonald's (MCD) and Yum Brands (YUM). These partnerships could help accelerate its revenue in similar fashion to when it formed deals with Starbucks (SBUX) and Dunkin’ (DNKN) which now sells its plant-based sausage sandwiches. Beyond has been aggressively expanding its presence around the world, announcing in September manufacturing plans in China slated for in early 2021.
On Thursday these topics, along with the company’s guidance, will be the main focus on the conference call. In recent quarters, there has been noticeable weakness with its restaurant partners which have been offset by better-than-expected sales in its retail partners. Will this trend continue? Investors will also want an update of progress of the company’s international expansion. Nevertheless, with the stock down 40% over from its 52-week high of $221, Beyond might not have to impress too much on Thursday for the stock to show more signs of life.
For the three months that ended March, Wall Street expects the El Segundo, Calif.-based company to lose 19 cents per share on revenue of $113.83 million. This compares to the year-ago quarter when earnings came to 3 cents per share on revenue of $97.07 million. For the full year, ending in December, the loss is expected to be 48 cents per share, up from a year-ago loss of 60 cents, while full-year revenue is expected to rise 41.2% year over year to $574.23 million.
Despite the fact that its product line available in more than 84 countries in 112,000 retail and food service locations, profitability still seems too far away for some investors. This is because the company’s aggressive growth efforts have come at a significant cost. In the fourth quarter earnings on Feb. 25, it reported an adjusted loss of 34 cents per share, wider than the loss of 14 cents analysts expected. Q4 revenue of $101.9 million rose just 3.5%, missing by about $3 million.
The quarterly revenue and profits were adversely impacted by weakened food service demand resulting from the pandemic. Weakness with its restaurant partners was offset by better-than-expected sales in its retail partners. "we continue to press forward with strategic investments in service of our future growth," CEO Ethan Brown said during the conference call with analysts. Brown believes the company is at a pivotal phase and can become more mainstream.
Meanwhile, for the stock to rebound, on Thursday, aside from updates relates to expansion plans to include other retail locations, investors will want to see Beyond Meat’s revenue re-accelerate from recent partnerships with McDonald's and other announced deals.
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