Beyond Meat (BYND) Last Update 6/27/22
Related: CMG KO MCD PEP
% of Stock Price
Revenue
Gross Profits
Free Cash Flow
Beyond Meat
STOCK PRICE
DIVISION
% of STOCK PRICE
Retail
68.2%
$21.13
Net Debt
20.2% $6.28
TOTAL
100%
$30.99
$24.72
Yours
Trefis Price
N/A
$36.69
Market
 
Top Drivers for Period
Key Drivers
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RECENT NEWS AND ANALYSIS

Potential upside & downside to trefis price

Beyond Meat Company

VALUATION HIGHLIGHTS

  1. Retail constitutes 68% of the Trefis price estimate for Beyond Meat's stock.
  2. Restaurant & Foodservice constitutes 32% of the Trefis price estimate for Beyond Meat's stock.

WHAT HAS CHANGED?


  1. BYND Reports A Weak Q1

    Beyond Meat reported revenue of $109.5 million, up 1.2% year-over-year (y-o-y). Things went from bad to worse, as its gross profit margin of 0.2% was far worse than the 30.2% recorded in the prior-year quarter. This resulted in a net loss of $100.5 million, or a loss per share of $1.58. It should be noted that BYND's total volume of products increased 12.4%, but it was offset by a 10% decline in the price per pound during Q1.

  2. Future Outlook

    The company is guiding for full-year revenue in a range of $560 million to $620 million, which would represent a growth of 27% at the midpoint of its guidance. On a positive note, management maintained its full-year forecast, suggesting the pressure might be short-lived. However, the lack of profit guidance has some investors concerned that there could be more suffering in store for the bottom line.

  3. Tie-up with McDonald's

    McDonald’s started testing Beyond Meat's McPlant patty burger in the U.S. late last year and expanded the program in February 2022 to more locations.

  4. POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE


    Below are key drivers of Beyond Meat that present opportunities for upside or downside to the current Trefis price estimate:

    Beyond Meat's Retail Gross Profit Margin


    • Retail Gross Profit Margin : Gross margins of the retail division declined from 35.6% in 2019 to 25.8% in 2021, led by a sharp fall in volume sold. We forecast the gross profit margin for the division to increase significantly to close to 56% by the end of Trefis' forecast period, driven by rising unit sales, higher price per pound as BYND captures additional market share, and better cost management. However, if sales volumes do not pick up as much as expected such that gross margins increase to 50% by the end of Trefis' forecast period, we could see the Trefis price estimate revised downward by 10%.

    • Restaurant & Foodservice (R&F) Product Sales: : U.S. Retail Products sold through BYND's restaurant and foodservice outlet partners witnessed a significant increase from 21.35 million in 2019 to 44.57 million in 2021. With the company pushing more fresh meat into the market, we forecast R&F products to increase to 77 million by the end of Trefis' forecast period. However, if the market for plant-based meat products expands much faster and BYND is able to capture a much higher share than expected, such that fresh meat volume from the R&F segment increases to 85 million by the end of Trefis' forecast period, we could see the Trefis price estimate revised upward by 15%.

    • BUSINESS SUMMARY


      Beyond Meat is one of the fastest-growing food companies in the United States, offering a portfolio of revolutionary plant-based meats. It produces meat directly from plants, an innovation that enables consumers to experience the taste, texture, and other sensory attributes of popular animal-based meat products while enjoying the nutritional benefits of eating plant-based meat products. The company has developed three core plant-based product platforms that align with the largest meat categories globally: beef, pork, and poultry.
      BYND's flagship product is The Beyond Burger, the world’s first 100% plant-based burger merchandised in the meat case of grocery stores. The Beyond Burger is designed to look, cook, and taste like traditional ground beef. Products are currently available in approximately 30,000 points of distribution primarily in the United States as well as several other countries, across mainstream grocery, mass merchandiser, and natural retailer channels, and various food-away-from-home channels, including restaurants, food service outlets, and schools. In addition, the company is diversifying and pushing deeper into the plant-based chicken segment with the distribution of its Beyond Chicken Tender to 8,000 new grocery and big-box retailers. The bigger aim is to build on its success with Beyond Meat burger patties.
      New product launches are expected in the second half of 2022. The company was focused on fast-food partnerships in 2021 over launching new retail products. So, a strategy reversal in 2022 could be a big challenge in the near term.

      SOURCES OF VALUE

      1. Beyond Meat has two operating segments:
        • Retail
        • Restaurant and Foodservice (R&F)

    • Retail Division

      Retail channel net revenues increased 8.1% to $324.8 million in 2021 from $300.6 million in 2020. This was driven by increased sales to international customers, partially offset by decreased sales in the U.S. retail channel. The division contributed 70% of the company's total revenue for FY 2021. The retail division contributes 73% of BYND's value.
    • Restaurant and Foodservice (R&F) Division

      The foodservice channel's net revenues recovered from 2020 levels and increased 31.7% to $139.9 million in 2021 from $106.2 million in 2020. During the second half of 2021, the recent and more virulent COVID-19 variants adversely impacted the food service recovery. The impacts of the ongoing COVID-19 pandemic also continue to result in delays in tests or launches of its products among its food service customers and negatively impact the rate of its growth. The R&F division contributes 27% of BYND's value.

      KEY TRENDS

      Rise of plant-based products

      The health-conscious millennials are switching to healthier alternatives to traditional meat, such as plant-based meat which offer health benefits and environmental protection. U.S. sales of plant-based meat are rising faster than sales of regular meat. Nielsen says annual U.S. sales of plant-based meats jumped 42 percent between March 2016 and March 2019 to a total of $888 million. Traditional meat sales rose 1 percent to $85 billion during the same time. Additionally, in the United States, the current size of the non-dairy milk category is equivalent to approximately 13% of the size of the dairy milk category. Thus, following this trend, Beyond Meat aims to take advantage of rising consumer demand for plant-based meat products, which provide health benefits without compromising on taste and texture.
      After posting an impressive 45 percent increase in dollar sales in 2020 and catapulting the category past the billion-dollar mark, plant-based meat sales remained steady in 2021—dollar sales were flat, falling short of industry expectations for continued rapid growth.

      Higher demand for fresh meat

      Though convenience is an important attribute, most of the consumers today rank product quality over convenience. The health benefits and quality of fresh meat outweighs the convenience provided by ready-to-heat frozen products, which have shifted more consumers toward fresh meat products. Sales of frozen foods over the 2016-2021 period is expected to experience a negative compound annual growth rate (CAGR) of -1.2% (as per report by Packaged facts - a leading market research publisher covering the food, beverage, consumer packaged goods, and demographic sectors for over 50 years). Accordingly, Beyond Meat has redirected its efforts toward pushing more of its fresh products in the market than frozen meat. The company discontinued its frozen chicken strips product line during the first quarter of 2019. Earlier it had discontinued another frozen meat product in 2016. The company's frozen products' volume sales have declined from 3.872 million pounds in 2016 to 3.416 million pounds in 2018. During the same period, the company's fresh meat product volume sales have increased more than 100x from 0.108 million pounds to 11.826 million pounds. Trefis expects this trend to continue with higher consumer demand for fresh meat and BYND's increased focus on its fresh meat offerings.