Beyond Meat (NASDAQ: BYND), the leading maker of plant-based meat substitutes, is slated to report its third-quarter 2020 results on Monday, Nov. 9, after the market close. Anearnings callis scheduled to follow at 4:30 p.m. EST.
Investors are probably approaching the report with optimism regarding revenue growth. In both reported quarters this year, the company breezed by Wall Street's sales expectations. The COVID-19 pandemic has been providing a tailwind to the company's retail business, driven by more consumers eating at home. This boost has been big enough to more than compensate for the struggles in the foodservice business, which has been hurt by widespread temporary indoor restaurant closures.
Yet investors are likely feeling uncertainty with respect to bottom-line performance. In the first quarter, Beyond Meat crushed the analyst earnings consensus estimate. Shares rocketed 26% the day after the release. In the second quarter, however, bottom-line results "only" met expectations. This isn't necessarily a negative -- certainly not for long-term investors who shouldn't be overly focused on any one quarter's results. However, the company's stock is richly valued, so merely meeting the consensus isn't likely to satiate some investors. Shares fell 6.7% the day after the Q2 release.
In 2020, Beyond Meat stock is up 114% as of Oct. 27, compared with the S&P 500's 6.5% return. Shares have gained 548% since the company's May 2019 initial public offering (IPO).
Beyond Meat's key numbers
Here are the year-ago period's results and Wall Street's estimates to use as benchmarks.
Q3 2019 Result
|Q3 2020 Wall Street Consensus Estimate||Projected Change YOY (Decline)|
|Revenue||$92.0 million||$131.4 million||43%|
|Adjusted earnings per share (EPS)||$0.06||$0.05||(17%)|
For context, in the second quarter, Beyond Meat's revenue soared 69% to $113.3 million, easily topping the $99.8 million that analysts had been expecting. Adjusted for one-time items, loss per share narrowed 60% to $0.02. That result hit Wall Street's estimate on the bull's-eye.
In mid-September, the company launched Beyond Meatballs in the U.S. retail channel. Given how late in the second quarter the product launched, it likely won't add materially to Q3 results. However, on theearnings call management will probably comment about the product's early sales performance. (In early October, the company rolled out another new retail product, Beyond Breakfast Sausage Links.)
Channel and geographic performance
Here's how the distribution channels and geographic markets performed last quarter:
|Geographic Distribution Channel||Q2 2020 Revenue||Change YOY (Decline)|
|U.S. retail||$90.0 million||195%|
|U.S. foodservice*||$6.5 million||(61%)|
|U.S. total||$96.5 million||105%|
|International retail||$9.6 million||167%|
|International foodservice||$7.2 million||(57%)|
|International total||$16.8 million||(17%)|
|Total revenue||$113.3 million||69%|
Investors can expect continued strength in the overall retail channel and weakness in the foodservice channel. However, it's possible we could see some improvement in the foodservice business, and perhaps a corresponding deceleration in growth on the retail end.
Beyond Meat's third quarter covers the late June through late September period -- or essentially much of the summer in the Northern Hemisphere. The company's U.S. foodservice business could have been helped by the increase in outdoor restaurant dining during this period. Moreover, the international foodservice business likely got a boost from the company's nascent China business.
On Beyond Meat'searnings call it's almost guaranteed that management will provide at least some color on the company's China business performance.
In the second quarter, the company launched in China via a partnership with Starbucks (NASDAQ: SBUX). Three Beyond Meat dishes are on the global coffeehouse giant's menu in its China stores. Moreover, China -- which is where the pandemic started -- is one of the handful of countries that quickly controlled its COVID-19 outbreak.
In the first quarter, management pulled 2020 guidance, citing uncertainty surrounding the pandemic. Given that there is still much uncertainty, particularly in the hard-hit U.S., it seems unlikely that management will issue any formal guidance. However, on theearnings call investors can probably expect management to provide color on how the fourth quarter is shaping up so far.
For Q4, Wall Street is modeling for revenue of $135.7 million, representing growth of 38% year over year. Analysts also expect adjusted EPS of $0.03, compared to a loss per share of $0.01 in the year-ago period.
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Beth McKenna has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Beyond Meat, Inc. and Starbucks and recommends the following options: short November 2020 $85 calls on Starbucks. The Motley Fool has a disclosure policy.
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