Beyond Meat, Inc.

BYND Details

Top-line Grew by 141% on y-o-y Basis: Beyond Meat, Inc. (NASDAQ: BYND) operates in the food business in the United States, which offers unique products like plant-based meats. On June 17, 2020, the company announced that with the introduction of Cookout Classic™, it is making this plant-based burger more available and reasonable this summer. These burgers are available at Walmart, Target and other retailers nationwide commencing from the week of June 22. In another update, the company stated that it has expanded its first co-manufacturing capabilities in Europe with the formal introduction of the Zandbergen co-manufacturing facility in Zoeterwoude, the Netherlands. 

Q1FY20 Business Highlights for the Period ended28 March 2020: BYND declared its quarterly results, wherein the company reported net revenue of $97.1 million, up 141% on y-o-y basis. The company reported gross profit at $37.7 million, as compared to $10.8 million in the previous corresponding period. The business witnessed higher sales volumes across the retail, restaurant, and foodservice channels. The quarter was marked by the expansion of points of distribution, which includes the addition of new customers. Gross margin came in at 38.8%, up from 26.8% in pcp, which was aided by operating leverage and production efficiency improvements. The company reported a net income of $1.8 million during the period as compared to a net loss of $6.6 million in the year-ago period. The company exited the quarter with total current assets of $415.9 million, which includes cash and cash equivalents of $246.4 million and accounts receivable of $36.3 million. The company reported its capital expenditure of $12.4 million, as at 28 March 2020.

Key Q1FY20 Income Statement Highlights (Source: Company Reports)

Outlook: BYND remains on track to benefit from food-at-home consumer demand in its retail channel. Further, in order to enhance the taste and texture of its plant-based meat products, the company invests considerably in research and development (R&D). However, due to the continued uncertainty led by COVID-19 pandemic, the company withdrew its 2020 outlook.

Key Risks: The company has limited exposure to international markets, especially in Asia, where the outbreak has been upsetting economic activities. During the quarter, BYND witnessed a reduction in sales to foodservice customers due to the ongoing COVID-19 health crisis, which remains a potential headwind.

Stock Recommendation: The stock of BYND closed at $141.68 with a market capitalization of $8.8 billion as on 26 June 2020. The stock is trading close to its 52-week trading range of $48.18 to $239.71. The stock has generated mixed returns of 6.63% and 99.27% in the last one month and three-months, respectively. The business offers unique products of plant-based meats and delivered exponential growth in the recent past. Gross margin of the company stood at 38.8% in Mar’20, higher than the industry median of 27%. EBITDA margin for the same time span stood at 7%, lower than industry median of 11.2%. On the valuation front, the stock is trading at an EV/Sales multiple of 23.4x as compared to the industry median of 1.6x on TTM (Trailing Twelve Months) basis. Considering the price movement over the last three months, business prospects, and current trading levels, we have a wait and watch stance on the stock at the current market price of $141.68 per share, down 2.52% on 26 June 2020.

BYND Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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