Beyond Meat Earnings: Is a Stock Feeding Frenzy or Famine Coming?

Beyond Meat (BYND -0.17%) is slated to report its fourth quarter and full-year 2019 results on Thursday, Feb. 27, after the market close. The release will be followed by an analyst conference call at 4:30 p.m. EST.

The maker of plant-based beef and sausage substitutes is heading toward its release on a solid note. Last quarter, it easily surpassed Wall Street's consensus estimates by posting a profit of $0.06 per share on revenue of $92 million. Analysts had been looking for EPS of $0.03 on revenue of $82.2 million. (The stock dropped 22.2% on the day following the earnings release, Oct. 29, but we can attribute that to the expiration of the lock-up period for insiders, which means that they were allowed to begin selling their shares on that day.) 

Moreover, Beyond Meat stock is up 53.7% in 2020 through Friday, Feb. 14, making the S&P 500's respectable 4.8% return over this period look like mere crumbs. (Below is a stock chart since the company's May 2019 initial public offering, or IPO.) With this type of recent beefy gain and its lofty stock valuation -- the forward price-to-earnings ratio is 283 -- Beyond Meat needs to deliver on fourth quarter results and 2020 guidance if it doesn't want its stock to be pummeled.

Image source: Beyond Meat.

Beyond Meat's key quarterly numbers

Here are last quarter's results and Wall Street's estimates to use as benchmarks. (The usual year-ago results aren't provided here because the company wasn't publicly traded a year ago, so those results weren't publicly released.) 

Data sources: Beyond Meat and Yahoo! Finance. QOQ = quarter over quarter.

Yes, Wall Street is expecting both revenue and earnings to come in lower than last quarter. Some seasonality in parts of the company's business is probably a main reason for the expectation that revenue will decline, and the lighter revenue and heavy investments in growth are likely the reasons behind the projection that earnings will also fall. 

Last quarter, management raised its full-year 2019 revenue guidance to $265 million to $275 million, up from its previous outlook of revenue greater than $240 million. This revised 2019 guidance implies a fourth-quarter revenue outlook of $65.6 million to $75.6 million.

The company (which doesn't provide an earnings outlook) also expects 2019 adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of $20 million. Adjusted EBITDA for the first nine months of 2019 was $15.8 million, so adjusted EBITDA of $4.2 million is expected in the fourth quarter.

For context, in the third quarter, revenue soared 250% year over year to $92 million. Net income came in at $4.1 million, or $0.06 per share, compared with a net loss of $9.3 million, or $1.45 per share, in the year-ago period. Notably, this was the company's first quarterly profit. 

Data by YCharts.

Product and channel performance

Beyond Meat slices and dices its revenue performance in two ways. For context, here's how the product platforms and distribution channels performed last quarter:

Data source: Beyond Meat. YOY = year over year.

Data source: Beyond Meat.

The rapid year-over-year growth was driven by Beyond Meat inking distribution deals with major restaurant chains including Dunkin Brands and Tim Hortons, which is part of Restaurant Brands International.

2020 guidance

The market is a forward-looking machine, so Beyond Meat stock's price movement on the day after its earnings release -- Friday, Feb. 28 -- should hinge more on the company's outlook than its fourth quarter results, relative to Wall Street's expectations.

So, investors should know that analysts are modeling for the following:

• Q1 2020: A loss of $0.01 per share on revenue of $79.2 million. This compares to a loss of $0.14 per share on revenue of $40.2 million in the year-ago period. So, the Street is looking for the loss per share to narrow significantly and revenue to surge 97% year over year.
• Full-year 2020: EPS of $0.41 on revenue of $492.8 million.