Beyond Meat (BYND) stock has been in the meat grinder for some time. Once the darling of the entire market after its stock soared north of $200 from its IPO price of $20, the plant-based meat giant has lost all of its sizzle.
The stock has lost more than 50% of its value so far this year, including a 45% decline in the past six months. And when expanding that view by twelve months, shares have plunged some 75%, compared to a 7.5% decline in the S&P 500 index. The market has seemingly given up on the company’s ability to grow revenues and profits. Ahead of its second quarter fiscal 2022 earnings results Thursday, investors want to know whether the shares have bottomed and if the stock can finally past the taste test.
Even the company’s vegan customers are now asking: Where’s the beef? Aside from wage inflation, the company is dealing with supply chain shortages which has impacted its once torrid growth pace. It also appears that commercial traction is fading, which has resulted in steepening losses. In the most-recent quarter, the company not only missed revenue estimates, but it also announced a large quarterly loss. On the bright side, the company posted almost $110 million in total revenue, though but it was offset by downbeat gross margin.
The management has guided for continued revenue growth. The market’s bearishness regarding emerging competitive threats has proved true. The company posted just 14% growth in 2021, down from 37% growth in 2020 and drastically below the 239% growth generated in 2019. Trading below its IPO price, the stock looks like good value at current levels. But the company must show its can grow its gross margins and achieve profitability. And assuming there is no further deterioration in growth, the stock can stabilize and start moving higher from here.
For the three months that ended June, Wall Street expects the El Segundo, Calif.-based company to lose $1.18 per share on revenue of $151.18 million. This compares to the year-ago quarter when the loss came to 31 cents per share on revenue of $149.43 million. For the full year, ending in December, the loss is expected to be $4.48 per share, wider from a year-ago loss of $2.87, while full-year revenue is expected to rise 21% year over year to $561.71 million.
Beyond Meat’s recent struggles are also felt by some of the largest retailers, including Walmart (WMT) which last week reported that food price inflation is impacting its shoppers' behavior. While lowering its earnings outlook for a second time, Walmart said consumers are opting for less expensive items which is forcing the company to be more aggressive in its discounting in order to keep grocery inventory moving. These markdowns are likely to impact Beyond Meat’s revenue and profits for the just-ended quarter.
In the first quarter, the company reported adjusted loss of $1.58 per share which missed Street estimates by 60 cents. The Q1 revenue also fell short of estimates, coming in at $109.45 million, or $2.15 million shy of consensus. The profit miss was the company’s seventh in a row, while revenue was shy for the second straight quarter. Despite all of that, there is still hope that the company can turn things around.
“We are confident in the future we are building while advancing our mission to bring plant-based meats and their attendant health, climate, natural resource, and animal welfare benefits to consumers around the world,” CEO Ethan Brown said in a statement. All told, this will be an important quarterly report for the company which has now seen how consumers have responded to its product while gaining insight into their spending habits.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Richard Saintvilus
After having spent 20 years in the IT industry serving in various roles from system administration to network engineer, Richard Saintvilus became a finance writer, covering the investor's view on the premise that everyone deserves a level playing field. His background as an engineer with strong analytical skills helps him provide actionable insights to investors. Saintvilus is a Warren Buffett disciple who bases his investment decisions on the quality of a company's management, its growth prospects, return on equity and other metrics, including price-to-earnings ratios. He employs conservative strategies to increase capital, while keeping a watchful eye on macro-economic events to mitigate downside risk. Saintvilus' work has been featured on CNBC, Yahoo! Finance, MSN Money, Forbes, Motley Fool and numerous other outlets. You can follow him on Twitter at @Richard_STv.
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