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Beyond Meat Earnings: Will the Stock Look Tasty After Tuesday's Report?

By Beth McKenna – May 3, 2020 at 4:00PM

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The meat substitute maker's stock is up 43% over the last month, so it has a lot to prove when it reports Q1 earnings.

Beyond Meat (BYND -5.55%), the leading maker of plant-based meat substitutes, is slated to report its first-quarter 2020 results on Tuesday, May 5, after the market close. 

Investors are probably going into the report hoping for the best of a challenging situation. It's highly probable that the coronavirus pandemic negatively impacted the company's results in March, the last month of the quarter.

Despite concerns about Beyond Meat's near-term results, many investors seem optimistic about its growth prospects. Over the four-day period from April 21 through April 24, shares soared 37.5% following coffeehouse giant Starbucks' (SBUX -0.85%) announcement that it was introducing three Beyond Meat dishes to its menu in China starting on April 22. This partnership marks Beyond Meat's entrance into the Chinese market. 

In 2020, Beyond Meat stock is up 21.1%, while the S&P 500 (including dividends) is down 11.8%, as of May 1. Shares have gained 266% since the company's May 2019 initial public offering, or IPO, at $25 per share.  

Two Beyond Meat burgers inside buns with cheese, greens, and onions.

Image source: Beyond Meat.

Beyond Meat's key numbers

Here are the year-ago period's results and Wall Street's estimates to use as benchmarks. 

Metric

Q1 2019 Result 

Q1 2020 Wall Street Estimate Projected Change YOY
Revenue $40.2 million $87.3 million 117%
Earnings per share (EPS) ($0.14) ($0.06) Loss projected to narrow 57%

Data sources: Beyond Meat and Yahoo! Finance. YOY = year over year.

Wall Street analysts expect robust revenue growth in the quarter and the loss per share to narrow 57% year over year. The projections, however, were rosier 60 days ago, or before the COVID-19 epidemic officially morphed into a global pandemic.

At that time, analysts were expecting Beyond Meat to turn in a loss of just $0.01. One main reason the Street now anticipates a larger loss is probably because the company has incurred expenses associated with keeping production employees as safe as possible from the virus. These would include distancing measures, which would decrease productivity.

Analysts also likely pared back their revenue expectations to reflect lower foodservice sales at the end of the quarter. In mid-to-late March, U.S. states began issuing stay-at-home measures and most ordered restaurants to close their dining areas. 

Product and channel performance

Here's how the product platforms and distribution channels performed last quarter:

Product  Q4 2019 Revenue Change YOY
Fresh meat $102.1 million 238%
Frozen meat $3.6 million (17%)
Less Discounts ($7.2 million) Loss widened by 141%
Total $98.5 million 212%

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

Distribution Channel  Q4 2019 Revenue Change YOY
Retail $40.6 million 199%
Restaurant and foodservice $57.8 million 223%
Total $98.5 million 212%

Data source: Beyond Meat.

Beyond Meat has a significant exposure to the foodservice channel, which accounted for 59% of its revenue last quarter. This channel will be hurting because of temporary restaurant closures. However, the pandemic is likely providing a tailwind for the company's retail sales because folks in many parts of the country have been stockpiling food and critical supplies. Investors should expect the crisis' net effect on sales to be negative.

2020 guidance

The market looks forward, which makes guidance ultra-important. Many companies are either pulling their 2020 outlook or updating it due to the uncertainty surrounding the pandemic. We can probably expect the same from Beyond Meat. 

Here's the 2020 guidance the company provided in late February:

  • Net revenue in the range of $490 million to $510 million, representing growth of 64% to 71% from 2019.
  • Gross margin in the range of 33% to 35%.
  • Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) as a percentage of net revenue approximately flat with the 2019 result. This is because the company "anticipates accelerated investments in marketing, R&D and international expansion initiatives in 2020." (In 2019, adjusted EBITDA was $25.3 million, or 8.5% of net revenue.) 

Wall Street is now modeling for 2020 revenue of $465.5 million, or growth of 53.2% year over year. This estimate is 6.9% below Beyond Meat's current guidance at the midpoint.

Beth McKenna has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Starbucks. The Motley Fool recommends Beyond Meat, Inc. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Beyond Meat Stock Quote
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BYND
$15.14 (-5.55%) $0.89
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