Beyond Meat, Inc. (BYND) is a leading plant-based protein firm that provides a portfolio of revolutionary plant-based proteins created from basic ingredients that do not include GMOs, bioengineered chemicals, hormones, antibiotics, or cholesterol. The company’s shares have surged 46.2% over the past month.
However, the stock has declined 72.2% over the past year and 46.8% year-to-date to close its last trading session at $34.68. In addition, the stock is currently trading below its 52-week high of $134.99, which it hit on August 10, 2021.
According to Piper Sandler analyst Michael Lavery, Beyond Meat retail sales growth is continuing to drop, and the new jerky's early success is “masking a greater acceleration in declines for the rest of its portfolio.”
In addition, last month, BTIG analyst Peter Saleh warned clients about BYND's association with McDonald's Corporation (MCD). BYND is a partner in McDonald's McPlant burger, which, according to Saleh, is not doing well. As a result, the analyst doubts that McPlant will be on McDonald's national U.S. menu later this year.
Here's what could shape BYND's performance in the near term:
Premium Valuation
In terms of forward EV/Sales, the stock is currently trading at 4.96x, 176.5% higher than the industry average of 1.80x. Also, its forward Price/Sales of 3.89x is 229.9% higher than the industry average of 1.18x. Moreover, BYND's trailing-12-month Price/Book of 53.76x is 1996.6% higher than the industry average of 2.56x.
Inadequate Financials
BYND's revenue increased 1.19% year-over-year to $109.46 million for the first quarter ended April 02, 2022. Its operating loss grew 296.1% from the year-ago value to $97.62 million. The company’s net loss surged 268.4% from the prior-year quarter to $100.46 million. In addition, its net cash used in operating activities came in at $165.21 million, representing a year-over-year increase of 438.9%.
Negative Profit Margins
BYND's trailing-12-month gross profit margin of 18.2% is 44.1% lower than the industry average of 32.5%. Also, its trailing-12-month ROA, ROC, and net income margin are negative 19.7%, 11.1%, and 54.8%, respectively. Moreover, its trailing-12-month negative EBITDA margin of 44.5% compares to its industry average of 12.1%.
Consensus Rating and Price Target Indicate Potential Downside
Of the 11 Wall Street analysts that rated BYND, four rated it Sell, and seven rated it Hold. The 12-month median price target of $24.38 indicates a 29.7% potential downside. The price targets range from a low of $14.00 to a high of $44.00.
POWR Ratings Reflect Bleak Outlook
BYND has an overall F rating, which equates to a Strong Sell in our proprietary POWR Ratings system. The POWR ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight different categories. BYND has an F for Stability and Sentiment. The stock beta of 1.65 is consistent with the Stability grade. In addition, consensus rating and price targets are in sync with the Sentiment grade.
Of the 86 stocks in the B-rated Food Makers industry, BYND is ranked last.
Beyond what I've stated above, you can view BYND ratings for Value, Growth, Momentum, and Quality here.
Bottom Line
BYND’s widening losses and poor consensus price estimates are concerning. Furthermore, analysts expect its EPS to decline by 277.4% in the current quarter ended June 2022 and 55.7% in the current fiscal year. So, we think the stock is best avoided now.
How Does Beyond Meat Inc. (BYND) Stack Up Against its Peers?
While BYND has an overall F rating, one might want to consider its industry peers, Industrias Bachoco S.A.B. de C.V. (IBA), JBS S.A. (JBSAY), and Sanderson Farms Inc. (SAFM), which have an overall A (Strong Buy) rating.
BYND shares rose $0.77 (+2.22%) in premarket trading Tuesday. Year-to-date, BYND has declined -46.78%, versus a -18.98% rise in the benchmark S&P 500 index during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.
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