Beyond Meat (BYND +13.79%) stock underperformed the market by a wide margin last year, according to data provided by S&P Global Market Intelligence. The stock declined 27% in 2023 compared to a 24% rally in the S&P 500. That drop followed a tough year in 2022 for the plant-based meat specialist, which is still reeling from weaker industry demand and a tough promotional environment.
Wall Street was disappointed to see Beyond Meat post significant sales declines for the year, along with big net losses for a second straight year.
Weak sales
Beyond Meat's last earnings update of the year was a good example of the poor operating and financial trends that investors saw throughout 2023. Sales declined 9% in the selling period that ran through late September. That slump was concentrated in the key U.S. market retail niche, which was down 34% as consumers looked for ways to stretch their grocery budgets.
NASDAQ: BYND
Key Data Points
Beyond Meat also reported far weaker sales at its restaurant partners, indicating stubborn demand challenges. Product introductions helped lift sales by a bit, but the company still seems to be several quarters away from stabilizing its losses. "We were disappointed by our overall results," CEO Ethan Brown said in an early-November press release.
Beyond Meat's slumping profit performance was another sore point for investors in 2023. The company is losing money even on a gross profit basis thanks to the combination of falling sales and declining prices. Net losses last quarter landed at $70 million compared to an over $100 million loss a year ago.
Cost cuts ahead
Investors should stay away from this stock for now. Beyond Meat is likely to announce an aggressive cost-cutting and restructuring plan in 2024, yet there's no clear path back to sustainable sales growth and improving annual profits to date. Most Wall Street pros are expecting sales to be flat in 2024 after declining by about 20% in 2023.
There are better options in the consumer staples space that deliver lower risk at attractive prices. Consider PepsiCo, for example. The snack and beverage giant is boosting organic sales and remains highly profitable. Beyond Meat, in contrast, isn't giving investors many reasons to like its stock in 2024. Shares are valued at a discount that appropriately reflects its major sales and earnings challenges.
