Beyond Meat Stock: A Competitive Analysis

by Trefis Team
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The shares of Beyond Meat (NASDAQ:BYND) currently trade at $107 per share, which is actually slightly below its pre-Covid level. On the other hand, shares of Bunge Ltd (NYSE: BG) are trading at $86 per share, which is 65% above its pre-Covid level. Does that mean BYND is a better stock pick compared to BG? Both companies belong to the food industry, but the offerings differ a little. While Bunge is involved in soybean export, food processing, grain trading, and fertilizers, Beyond Meat offers innovative plant-based meat products. Despite BG’s higher market cap, revenue and margin levels, BYND enjoys a significantly higher valuation multiple (P/S) on account of faster revenue and margin growth, and with it being a new company expected to continue rapid growth in the coming years. We compare a slew of factors such as historical revenue growth, returns, and valuation multiple in an interactive dashboard analysis, Beyond Meat vs Bunge: Industry Peers, But Which Stock Is A Better Bet?

Revenue Growth

  • Beyond Meat revenues have demonstrated better growth compared to Bunge over recent years, with BYND revenues expanding by a whopping 132% in the last three years. In comparison, Bunge revenues saw a decline of more than 3% during this period. For the last twelve months, BYND saw 13% growth in revenues while Bunge’s revenues increased by 12%. The primary reason behind faster growth in BYND’s revenues over the years has been growth in sales of fresh meat from retail outlets restaurants and foodservice chains. Bunge revenues declined over the last three years due to a drop in Agribusiness and Sugar and Bioenergy segments. During the pandemic year, BYND’s revenues were more affected due to closing down of restaurants.
  • Beyond Meat earns revenues from sale of plant-based meat products – both frozen and fresh meat – from retail outlets, foodservice chains, and restaurants. Most of its revenues earlier came from the restaurant and foodservice division, but this changed during the pandemic, with retail becoming the bigger segment.
  • Bunge earns revenue from agribusiness, edible oil products, sugar and bioenergy, and fertilizers.

Returns (Profits)

  • Bunge has superior profitability compared to Beyond Meat. Bunge’s operating profit margin was above 3% in 2020 and stood at 4.3% over the last twelve months.
  • On the contrary, Beyond Meat has been incurring losses. Its margins stood at -12% in 2020 and at -9.4% in the last twelve months. The company has been incurring a lot of expenses for R&D, marketing, and expansion which has led to it making losses.
  • However, the improvement in Beyond Meat’s margins has been eye-popping. With sharp growth in revenues, margins have increased from -89% in 2017 to -9.4% over the last twelve months. In comparison, Bunge’s margins have hovered between 1% and 5%. Thus, the turnaround in Beyond Meat’s margins has been noteworthy.

Risk

  • Beyond Meat seems to have a stronger balance sheet due to better cash position compared to Bunge.
  • BYND’s debt stands at 77% of its total stockholders’ equity and liabilities, higher compared to 29% in the case of Bunge.
  • However, when we look at cash as a percentage of total assets, the metric stands at 69% in case of BYND, against just 2% for Bunge, suggesting that BYND has a much better cash management approach.

Net of it all

In absolute terms the revenue and margins of BYND appear to be much lower compared to BG. However, the growth in top and bottom line exhibited by Beyond Meat over recent years is commendable. With faster growth and better cash position, it rightfully commands a higher valuation multiple. Most importantly, Beyond Meat is likely to see a continuation of rapid growth over the next few years, mainly driven by its recent partnerships with Alibaba Group, McDonald’s, Coles in Australia, etc. With it being a fairly young company on the path of fast growth, Beyond Meat looks like a good bet for now.

 

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