Beyond Meat and Anheuser-Busch InBev likely appeal to very different types of investors. Beyond Meat, which became the first plant-based meat company to go public in 2019, will likely attract growth-oriented investors who believe the farming and meatpacking industries can't feed the world's growing population without social and environmental consequences.
AB InBev, the world's largest brewer (it sells over 500 brands of beer), should attract value-seeking investors. InBev has struggled with declining beer consumption rates over the past few years, but it's been premiumizing its flagship brands in overseas markets and launching new non-beer products to offset that secular decline.
Image source: Beyond Meat.
Beyond Meat's stock declined nearly 25% over the past 12 months, while shares of AB InBev surged nearly 90%. The recent rotation from growth to value stocks -- which was partly driven by rising bond yields, inflation fears, and a focus on reopening plays -- seemed to help AB InBev and hurt Beyond Meat. But does that market shift mean AB InBev will continue to outperform Beyond Meat over the next 12 months?
How fast are Beyond Meat and AB InBev growing?
Here's how fast Beyond Meat and AB InBev grew over the past two years.
|
Revenue Growth (YOY) |
FY 2019 |
FY 2020 |
Q1 2021 |
|---|---|---|---|
|
Beyond Meat (BYND 0.98%) |
239% |
37% |
11% |
|
AB InBev (BUD +0.40%) |
4% |
(4%) |
17% |
Data sources: Beyond Meat and AB InBev annual reports. YOY = Year over year.
Beyond Meat generated explosive growth in 2019, as a growing number of restaurant and retail partners started to sell its products. However, its growth decelerated in 2020 as pandemic-induced restaurant closures hurt the foodservice business which contributed 26% of its revenue. On the bright side, its sales to consumers through retail channels doubled both domestically and overseas.
In the first quarter of 2021, Beyond Meat's foodservice revenue continued to decline. Its retail revenue continued rising but decelerated to just 28% growth in the U.S. while its international retail revenue surged 189%. It expects its revenue to rise 19% to 32% year over year in the second quarter, while analysts anticipate 38% sales growth for the full year.
Image source: Getty Images.
AB InBev generated stable growth in 2019, and the premiumization of its brands boosted its revenue per hectoliter by 3.1%. It streamlined its portfolio by divesting its Australian businesses and raised fresh cash by listing its Budweiser APAC division in a Hong Kong IPO.
AB InBev's revenue fell in 2020 as the closures of bars, restaurants, and other businesses offset its sales through retail channels. It cushioned that blow with its premiumization strategy, which boosted its revenue per hectoliter by 2.1% for the full year.
AB InBev's shipment volumes, revenue per hectoliter, and total revenue all returned to growth in the second half of 2020, so its growth in the first quarter of 2021 wasn't surprising. Its total volumes improved 13% and its revenue per hectoliter rose 4%.
AB InBev's ongoing expansion of its new "Beyond Beer" category, which includes canned wine, cocktails, hard seltzer, cider, and flavored malt beverages, supported that growth and further reduced its dependence on traditional beers. Analysts expect AB InBev's revenue to rise 11% for the full year.
Profit growth and valuations
Beyond Meat remains unprofitable according to generally accepted accounting principles (GAAP), and analysts don't expect it to post a profit anytime soon. Its adjusted EBITDA declined 53% in 2020, then dropped into negative territory in the first quarter.
Beyond Meat's profitability should improve as its foodservice business recovers in a post-pandemic market, but competition from other plant-based meat makers like Impossible Foods could prevent it from raising prices and force it to increase its research and development marketing expenses.
AB InBev's adjusted EBITDA declined 13% in 2020, mainly due to pandemic-related expenses and its slowdown in on-premise sales. But its adjusted EBITDA increased 14% in the first quarter and it remained profitable by GAAP measures. Analysts expect its adjusted earnings to grow 61% this year against an easy comparison to the pandemic's impact in 2020.
Beyond Meat's stock trades at about 11 times this year's sales, which makes it more comparable to a high-growth tech stock than a food stock. AB InBev trades at 21 times forward earnings and less than three times this year's sales.
The winner: AB InBev
I still like Beyond Meat as a speculative growth play, since it enjoys an early-mover advantage in the nascent plant-based meat market. But I can't recommend it over AB InBev right now as the market rotates from growth to value stocks.
Beyond Meat might outperform AB InBev over the next few years as the plant-based meat market expands, but I think it will struggle to outperform the alcoholic beverage giant over the next few quarters.
