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Beyond Meat stock (NASDAQ: BYND), a plant-based meat alternative company, is scheduled to report its fiscal first-quarter results on Wednesday, May 8. We expect BYND’s stock to likely trade lower with revenues and earnings missing expectations in its first-quarter results. BYND stock has dropped 37% in the last twelve months, largely underperforming the broader indices, with the S&P growing about 24% over the same period. A high inflation rate has caused shoppers to be less willing to pay a premium for plant-based protein products in the post-pandemic period. The company has been facing challenging revenue and considerable cash burn for about three years now. The company’s stock has declined thanks to the combination of inflation, pandemic-related shifts in demand, and rising competition. Beyond Meat’s stock remains under pressure as revenue continues to fall and solvency concerns persist. The company also made a strategic decision to discontinue the Beyond Meat Jerky products, as demand wasn’t enough. The company 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 $206 million (down from $323 million at year-end 2022).

BYND stock has suffered a sharp decline of 95% from levels of $125 in early January 2021 to around $8 now, vs. an increase of about 35% for the S&P 500 over this roughly 3-year period. Notably, BYND 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 -28% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 24% in 2023 – 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 – has been difficult over recent years for individual stocks; for heavyweights in the Consumer Staples sector including WMT, PG, and COST, and even for the megacap 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 each year over the same period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics. Given the current uncertain macroeconomic environment with high oil prices and elevated interest rates, could BYND face a similar situation as it did in 2021, 2022, and 2023 and underperform the S&P over the next 12 months – or will it see a recovery?

Our forecast indicates that BYND’s valuation is $7 per share, which is 15% lower than the current market price. Look at our interactive dashboard analysis on Beyond Meat Earnings Preview: What To Expect in Fiscal Q1? for more details.

(1) Revenues expected to come in below consensus estimates

Trefis estimates BYND’s Q1 2024 revenues to be around $70 Mil, below the consensus estimate. Beyond Meat’s Q4 retail sales fell 23% year-over-year (y-o-y) and restaurant and fast-food chain sales dropped 26% y-o-y in the U.S. market. The company saw revenue gains in overseas markets (particularly Europe) which partially compensated for the steep slump in domestic revenues, resulting in overall sales falling 8% y-o-y to $74 million. In Q4, the company’s volume fell 22.6% in the domestic retail segment and 25.9% in the domestic food service grouping. This happened despite the company charging lower per-pound prices, which should have supported volumes. Overall, BYND slashed its prices with net revenue per pound down 17% y-o-y in Q4, yet overall sales volumes still fell 7%. For the full-year 2024, we expect BYND Revenues to drop to $330 million, down 4% y-o-y.

2) EPS is also likely to miss consensus estimates

BYND’s Q1 2024 earnings per share (EPS) is expected to come in at a loss of 72 cents per Trefis analysis, missing the consensus estimate. In Q4, BYND’s net loss came in at $155.1 million, or a loss per share of $2.40, compared to a loss per share of $1.05 in Q4 2022. Beyond Meat’s gross margin turned negative in 2022 (-6%) compared to its positive gross margins of 25% in 2021 and 30% in 2020. In fact, the company’s gross margins are still in the red with 2023 margins at -24%. That said, the company heavily focuses on marketing and promotional activities, which doesn’t bode well for its margins. Beyond Meat’s adjusted EBITDA margins expanded to a 78% loss in full-year 2023 compared to a 66% loss the previous year.

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

Going by our BYND’s valuation, we expect a revenue per share (RPS) estimate of around $5.76 and a P/S multiple of 1.2x in fiscal 2024, translating into a price of $7, which is 15% 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.

[1] Returns as of 5/5/2024
[2] Cumulative total returns 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.