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Buy Beyond Meat Stock for Big Growth Potential?

Beyond Meat BYND was one of 2019’s hottest IPOs, outshining the likes of Uber UBER and Lyft LYFT. But the plant-based meat firm’s stock fell about as quickly as it soared, as Wall Street pulled back on the overheated stock. That said, BYND shares have surged 135% in 2020 and are up 15% in the past month, with the company estimated to report its Q3 results on October 26.

Going Beyond…

Beyond Meat was founded in 2009 and sells so-called plant-based meats that unlike veggie-based meat substitutes, aim to mimic the taste and consistency of their animal meat rivals. The firm’s portfolio has continued to grow and currently consists of multiple burger patties, sausages, beef crumbles, meatballs, and more. BYND’s expansion includes a deeper push into breakfast and rolling out more affordable, larger quantity offerings.

Beyond Meat boasts that its plant-based meats are healthier than its traditional meat counterparts, but these claims have been disputed. Therefore, it seems that Beyond Meat’s long-term success will likely be determined by its much larger goals: “By shifting from animal, to plant-based meat, we are creating one savory solution that solves four growing issues attributed to livestock production: human health, climate change, constraints on natural resources and animal welfare.”

There is clearly growing demand for plant-based meats, including rival Impossible Foods and other newcomers. On top of that, more established names in the food industry like Hormel Foods HRL, Tyson Foods TSN, MorningStar Farms, Kraft Heinz KHC, and more, have all jumped into the plant-based space.

Beyond Meat-based offerings can be found at restaurants such as Dunkin’ DNKN, and its packaged food is in stores everywhere from Safeway to Target TGT and Walmart WMT. In fact, the stock jumped after BYND announced at the end of September that it beefed up its distribution at Walmart from 800 stores to over 2,400.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

What’s Next?

The company’s revenue skyrocketed 240% from $88 million in FY18 to roughly $300 million in fiscal 2019. The climb came as Beyond Meat gained distribution and the broader plant-based market grew in popularity. BYND’s growth has slowed down from that breakneck speed, with Q1 FY20 sales up 141%, while Q2 popped 69%.

With this in mind, Zacks estimates call for its revenue to jump roughly 47% in both the third and fourth quarters. Overall, Beyond Meat’s fiscal 2020 revenue is projected to climb 65% to reach $491 million, with FY21 expected to come in another 61% higher to hit $791 million.

These estimates would mark the continuation of strong growth. And the back to back years of 60% or higher top-line expansion helps showcase stability and highlights that plant-based meat could be more than a fad.

Investors might also be pleased to see that BYND is expected to swing from an adjusted loss of -$0.04 per share in FY19 to +$0.06 this year. Plus, its FY21 EPS figure is projected to soar a whopping 770% to +$0.52 a share.

Bottom Line

Beyond Meat is a Zacks Ranks #3 (Hold) at the moment and the company is projected to release its Q3 results on October 26. BYND stock is currently trading at around $170 a share, which puts it about 25% off its summer 2019 record and about 12% off the 52-week highs it hit earlier this month. This could give the stock room to climb if it posts solid results or stronger-than-expected guidance.

There is still uncertainty when it comes to Beyond Meat’s longer-term success within this nascent plant-based meat market. But there are signs that the industry is here to stay, at least in the near-term. Therefore, BYND stock looks like it might be worth nibbling on as part of a growth-focused, homerun-style portion of a portfolio.

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Dunkin Brands Group, Inc. (DNKN): Free Stock Analysis Report
 
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Beyond Meat, Inc. (BYND): Free Stock Analysis Report
 
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