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

By Beth McKenna - Apr 23, 2021 at 12:00PM

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On May 6, investors will find out how the COVID-19 pandemic affected the meat-substitute maker's first-quarter 2021 results.

Beyond Meat (BYND 7.18%), the leading maker of plant-based meat substitutes, is slated to report its first-quarter 2021 results on Thursday, May 6, after the market close. An earnings call is scheduled to follow at 5 p.m. EDT.

Investors will probably be approaching the company's report with cautious optimism. In the last two quarters, revenue growth was anemic, and both the top and bottom lines missed Wall Street's expectations. Moreover, the company's facing a tough comparable, as revenue soared 141% year over year in the first quarter of 2020. That result was driven in part by consumers beginning to stockpile food following COVID-19-pandemic-driven stay-at-home orders being issued last March across much of the United States.

So where does the optimism come in? Beyond Meat's food-service business should start to recover from being torpedoed from the global crisis. States across the country, as well as countries around the globe, have been increasingly opening up their economies. Moreover, last quarter, the company announced two big partnerships -- with McDonald's and Yum! Brands (which owns KFC, Pizza Hut and Taco Bell) -- and investors are enthused about the long-term growth potential from these collaborations. 

Be prepared for volatility. Beyond Meat stock often makes big moves following the company's release of its quarterly results. Last year, the stock surged 26% after first-quarter results were announced, and plunged about 20% following the release of third-quarter results.

Shares of Beyond Meat (which went public in May 2019) are up 51.2% over the one-year period through April 22. The S&P 500 has returned 50.2% over the last year.

Two Beyond Meat burgers inside buns along 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 2020 Result 

Q1 2021 Wall Street Consensus Estimate Projected Change (YOY)
Revenue $97.1 million $113.8 million 17%
Adjusted earnings per share (EPS) $0.03 ($0.19) N/A. Result expected to flip to negative from positive.

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

Management didn't provide Q1 guidance, citing continued uncertainty surrounding the pandemic.

If Beyond Meat's revenue increases in the ballpark of 17% year over year (which equates to 12% sequential growth), as analysts expect, that would be its best revenue performance since the second quarter of 2020. In that quarter, revenue surged 69% year over year to $113.3 million, driven by consumers loading up on frozen protein sources during the early stages of the pandemic.

The company's year-over-year revenue growth in the last two quarters was 2.7% (third quarter 2020) and 3.5% (fourth quarter 2020). The weak growth in the third quarter was explainable -- some demand that would usually occur in that quarter got pulled forward into the second quarter, due to the consumer freezer-loading phenomenon. The lackluster growth in the fourth quarter is less explainable.

Beyond Meat's bottom-line results have been moving in the wrong direction and that dynamic is expected to continue in the first quarter, as the above chart shows. There are a few reasons for this: The company is investing in capital-intensive growth initiatives, it has increased promotional activities intended to entice more new consumers to try its products, and the pandemic has hurt efficiencies. 

Channel and geographic performance

Here's how the distribution channels and geographic markets performed last quarter:

Geographic Distribution Channel  Q4 2020 Revenue Change (YOY)
U.S. retail  $62.1 million 76%
U.S. food service  $15.3 million (43%)
U.S. total $77.4 million 25%
International retail  $13.0 million 139%
International food service  $11.6 million (63%)
International total $24.5 million (33%)
Total revenue $101.9 million 3.5%

Data source: Beyond Meat. *Food-service channel includes restaurants and traditional food-service operations.

It would be a good sign to see at least a little improvement in the food-service results.

Second-quarter guidance 

The stock market looks ahead, so any post-earnings release move in Beyond Meat's stock will probably hinge more on the company's Q2 outlook (assuming it issues one) than its Q1 results, relative to Wall Street's expectations.

For the second quarter of 2021, Wall Street is currently modeling for revenue of $143.5 million, representing growth of 27% year over year. On an adjusted basis, analysts expect Beyond Meat's loss to widen to $0.11 per share, from $0.02 per share in the year-ago period. 

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