After a nearly 46% decline this year, at the current price of around $7 per share, we believe Beyond Meat Stock (NASDAQ: BYND ), a plant-based meat alternative — is quite the price. BYND stock has fallen from about $12 to $7 year-to-date, largely underperforming the broader indexes, with the S&P growing about 18% over the same period. The company has been facing difficult earnings and a significant cash drain for about two years now. The company’s shares have fallen thanks to a combination of inflation, changes in demand related to the pandemic and increasing competition. Beyond Meat’s stock remains under pressure as revenue continues to fall and solvency concerns persist. Compared to its peers, BYND has yet to earn a full-year profit. While we acknowledge that it is not surprising that Beyond Meat is unprofitable given that it is a fairly young company (IPO in May 2019), still in its investment phase, the weak financials in the last few quarters have made investors skeptical about its progress. . There are a number of headwinds that continue to push BYND stock forward. In the US, the company’s distribution has peaked, while inventory levels remain high. In addition, the company is dealing with low plant utilization, lower revenue per pound, and termination of co-production agreements. The company also has a large amount of debt in its capital structure, which can become a significant risk factor in the current high interest rate environment. BYND has $1.1 billion in debt on its balance sheet and a restricted cash runway of $232.8 million (down from $310 million at the end of 2022).
Shares of BYND have suffered a sharp decline of 95% from levels of $125 in early January 2021 to about $7 now, against an increase of about 20% for the S&P 500 during this roughly 3-year period. Notably, BYND’s stock has underperformed the broader market in each of the last 3 years. Returns for the stock were -48% in 2021, -81% in 2022, and -46% in 2023 (YTD). By comparison, returns for the S&P 500 were 27% in 2021, -19% in 2022, and 19% in 2023 (YTD) – indicating that BYND underperformed the S&P in 2021, 2022 and 2023. In fact, consistently beating the S&P 500 – in good times and bad – it’s been tough over the past few years for individual stocks; for heavyweights in the Consumer Staples sector including WMT, PG and COST, and even for the mega-cap stars GOOG, TSLA and MSFT. In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has outperformed the S&P 500 every year during the same period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less roller coaster ride as evident in HQ Portfolio performance metrics. Given the current uncertain macroeconomic environment with high oil prices and high interest rates, BYND could face a similar situation as it did in 2021, 2022 and 2023 and underperforms the S&P over the next 12 months – or will it see a recovery?
Beyond Meat’s gross margin turned negative in 2022 compared to its positive gross margins of 25% in 2021 and 30% in 2020. In fact, the company’s gross margins were still in the red with Q3 margins at -9.6% but still better than the year. -action levels. Q3 2022 gross margins stood at -18%. Lower manufacturing costs, lower material costs, lower depreciation, and lower inventories per pound aided this improvement. That said, the company has a heavy focus on marketing and promotional activities, which does not bode well for its margins. In Q3 2023, the company’s revenue of $75 million decreased almost 9% year-on-year (joy), driven by an 11.6% decrease in net income per pound, partially offset by a 3.5% increase in the volume of products sold. In addition, the company’s adjusted EBITDA loss of $ 57.5 million compared to a loss of $ 73.8 million in the prior year period.
We anticipate Beyond Meat’s Earnings will be $367 million for fiscal year 2023, down 13% indeed. We now forecast earnings per share (RPS) to $6.12. Given the changes to our revenue and RPS forecast, we have revised ours Beyond the Evaluation of Meat to $7 per share, based on $5.76 expected RPS and 1.2x P/S multiple for fiscal year 2023 – almost 5% higher than the current market price. That said, the company’s stock appears appropriately priced at the current price. Beyond Meat expects net revenues to be in the range of $330 million to $340 million in FY 2023, representing a decrease of approximately 21% to 19% compared to 2022. The company continues to expect operating expenses to be approximately $245 million or less, before. one-time separation costs and potential savings associated with the company’s recent reduction in force.
It’s useful to see how its peers stack up. Look how Beyond Meat’s Peers rate on metrics that matter. You’ll find other valuable comparisons for companies across industries at Peer Comparisons.
| returns | Nov 2023 MTD (1) |
2023 YTD (1) |
2017-23 Total (2) |
| BYND Return | 12% | -46% | -91% |
| S&P 500 Return | 8% | 18% | 103% |
| Hit Enhanced Value Portfolio | 8% | 27% | 551% |
(1) Month and year-to-date from 11/21/2023
(2) Cumulative total profit since the end of 2016
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
