What happened
Shares of Beyond Meat (BYND 2.15%) rose over 77% in the first six months of the year, according to data provided by S&P Global Market Intelligence. That easily bested the 4% decline of the S&P 500 in that span and was a sign that investors are buying back into the company's growth pitch.
It's also worth acknowledging that the stock began the year far below all-time highs set last summer, which set the stage for a possible "recovery." While shares are cruising along right now, investors might not want to get too carried away. The effects of the coronavirus pandemic will cause an immediate shift in product mix from foodservice sales to consumer sales, which could stunt growth in the near term.
Can the growth stock continue rising heading into second-quarter 2020 earnings results?
Image source: Getty Images.
So what
As with many companies, Beyond Meat rescinded its full-year 2020 guidance after the coronavirus pandemic forced governments to restrict movement and shut down restaurants and bars throughout much of Europe and the United States. The animal-free protein developer sells products to both restaurants (defined as "foodservice sales") and consumers (defined as "retail sales"), but will obviously need to adjust distribution to favor consumer markets.
The good news is the shift was already underway before the health crisis struck. Consider the company's product mix from the first quarter of 2020:
|
Metric |
Q1 2020 |
Q1 2019 |
Change |
|---|---|---|---|
|
Retail sales, U.S. |
$49.9 million |
$19.5 million |
157% |
|
Foodservice sales, U.S. |
$22.6 million |
$8.8 million |
156% |
|
Retail sales, international |
$5.9 million |
$0.2 million |
N/A |
|
Foodservice sales, international |
$18.6 million |
$11.8 million |
57% |
|
Total revenue |
$97.0 million |
$40.2 million |
141% |
Data source: Press release.
In the first quarter of 2020, Beyond Meat generated 42% of total revenue from foodservice sales and the remaining 58% from retail sales. While direct sales to consumers have been growing as a share of total revenue for the last year, it's important to realize the significance of restaurants to the business. Can stay-at-home orders drive an increase in retail sales and offset a likely precipitous plunge in foodservice sales? Investors will soon find out.
Now what
As far as high-growth companies go, Beyond Meat is in rare company, due to its ability to generate operating income while growing hand over fist. That certainly helps to insulate the business from the volatility caused by the coronavirus pandemic, even if operations temporarily slip into the red for a few quarters. Just don't be surprised if shares are volatile following the release of second-quarter 2020 results, which could move the stock in either direction.
