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Teledyne Technologies and Beyond Meat highlighted as Zacks Bull and Bear of the Day
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For Immediate Release
Chicago, IL – August 9, 2021 – Zacks Equity Research Shares of Teledyne Technologies Incorporated (TDY - Free Report) as the Bull of the Day, Beyond Meat, Inc. (BYND - Free Report) as the Bear of the Day.
Teledyne Technologies is an excellent inflation play that provides shareholders with a nice mix of cyclical-value and innovation-driven profitable growth. Following its synergy-powered acquisition of FLIR System's last quarter, Teledyne is now positioned to drive significant double-digit top and bottom-line growth for the next couple of years. Analysts are increasingly optimistic about this stock, raising their near and long-term EPS estimates and propelling TDY into a Zacks Rank #1 (Strong Buy).
Teledyne's vast array of cutting-edge tech-driven products are utilized in critical industrial growth markets that heavily rely on its products. This allows the company to easily pass on its price increases to end markets with little to no margin deterioration.
TDY is an under-the-radar recovery stock that hasn't gained the market traction that I believe it deserves. You can see this from both its lack of analyst coverage and comparatively low daily volumes. Nevertheless, TDY shares are finally breaking out after 3 months of consolidation, with its most recent quarterly report being the impetus for its next leg higher.
TDY has been trading in a staircase pattern over the past 52-weeks. This peculiar trading pattern is not unusual for an overlooked stock such as this, as infrequent favorable headlines typically catalyze each step up. My next Fibonacci-derived price target, once TDY materially breaks above this $458 resistance level, is $495 on a technical basis. Still, the fundamental value is much closer to $525 or higher (15%+ upside from here).
Excellent Q2 Report Drives Bid
Teledyne Technologies blew its Q2 earnings out of the park, demonstrating record revenues, margins, and profits that far exceeded analysts' expectations. This industrial innovator also significantly raised its full-year EPS guidance by 27% from its Q1 projections, reflecting management's positive organic growth and synergy outlook from the recent FLIR acquisition (diluting shares by 25%, but offsetting that with robust, profitable growth).
The $8.1 billion acquisition of FLIR Systems has already provided positive synergies in its first few weeks under Teledyne's management. FLIR accounted for over $300 million of TDY's digital imaging revenues (more than 25% of Teledyne's total revenue) and combined with the division's organic growth, this segment was able to grow by 144% from the same quarter last year. Digital imaging now makes up more than half of the company's total top line. FLIR's cutting-edge sensory technology will be a strong tailwind for Teledyne in the coming years.
Even when ignoring the additional FLIR revenue, Teledyne exhibited double-digit organic sales growth for the first time since Q4 of 2019. The tailwinds from the economic recovery and further synergies from FLIR's integration will continue to drive record quarterly results moving forward. TDY is up just 4% since this report, meaning that you didn't miss this tremendous post-earnings buying opportunity. With the recent upward revisions and upgrades from its limited covering analysts, I don't see the bullish energy behind this stock waning anytime soon. After a quarter like that, these shares are cheaper than ever (on a valuation basis).
The Business
Teledyne is a high-growth industrial business categorized under aerospace & defense equipment in the Zacks database, but the company is so much more than that. According to the company website, Teledyne's end markets include "aerospace and defense, factory automation, air & water quality environmental monitoring, electronics design and development, oceanographic research, deepwater oil and gas exploration and production, medical imaging, and pharmaceutical research." Industries that are all at the forefront of this 4th Industrial Revolution, which is just commencing.
Final Thoughts
All 4 of the covering sell-side analysts on the ZRS platform are calling TDY a buy today, and I couldn't agree more. In addition, TDY's most recent analyst report was a particularly bullish call from a reputable firm of $540 a share (over 17% upside).
Every quarter it seems analysts are raising their price targets as Teledyne persistently exceeds analysts' estimates. Now that sensor/imaging powerhouse FLIR Systems is in the business mix, I expect to see accelerated success as the Roaring 20s take off.
Beyond Meat is a meatless miracle with a valuation that has run far past this 'trendy' stock's intrinsic value. Sell-side analysts are beginning to rein in their expectations as the market euphoria surrounding this cliché new plant-based protein alternative dissipates, pushing BYND into a Zacks Rank #5 (Strong Sell).
BYND remains the one stock that stands out to me as overvalued on the Zacks Strong Sell list. I mean, you don't see many public equities that are 44% off their recent highs that still have 2 sell ratings, considering that analysts are not very likely to recommend something as a sell unless fundamentals are way out of whack with the share price.
I have been apprehensive about this glorified consumer packaged goods (CPG) enterprise since it hit the public exchanges in May 2019. The company was and remains unprofitable and faces massive competition that could quickly put this meatless fairytale out of business with leading players in the sector having far superior operational maturity.
Each quarterly report that Beyond Meat releases makes me further question its shareholders' rationality, who are keeping this increasingly profitless company at a double-digit forward P/S valuation.
In its Q2 report Thursday evening, BYND marginally exceeded revenue estimates but came in below Zacks Consensus Estimates for the 5th consecutive quarter. The company is getting further and further away from profitability every quarter, and despite experiencing sales growth abroad, its domestic performance has been abysmal.
Beyond Meat has seen massive topline deceleration over the past 4 quarters, seemingly unable to get back to those pre-pandemic triple-digit growth figures. The company was forced to put on over $1 billion in debt in Q1 to remain solvent. Everything I review about this business points to an inept management team on top of a lousy business model. BYND is uninvestable from my perspective.
Why I Don't Like The Stock
First and foremost, this small alt-protein meat enterprise will not be able to just waltz into the CPG space and completely monopolize this niche. The big meat industry players like Tyson Foods, JBS Holdings, Cargill Meat and Perdue are all making moves in the plant-based meat segment. These food giants' proven distribution and supply chain operations and longstanding corporate relationships will be leveraged to put this start-up out of business.
Granted, Beyond Meat has secured some lucrative partnerships with global fast-food giants like McDonald's and Yum! Brands have justified some of BYND's upward move. However, its revenue in this segment has been unpredictable.
I am worried that this is a fad among younger consumers (where the primary demand is originating). The fact that this new plant-based meat isn't actually healthier than real meat may reverse its already hampered growth. Beyond Meat's products are all highly processed, and some nutritionists are saying that this faux-meat may actually be less healthy than traditional options.
BYND has appreciated over 395% from its IPO price in May of 2019 (169% from its first publicly traded price) and is now falling out of market favor since it peaked in later January. The company is trading at a double-digit P/S multiple. Its deeper slips into a bottom-line and cash-flow deficit are a massive red flag for a company with such an uncertain future.
Final Thoughts
I'm not going to be putting on a position in BYND one way or the other because of the stock's inherent volatility and r/wallstreetbets interest. I don't believe in Beyond Meat's growth narrative and think there are too many risks at its current valuations, notably the risk of never turning a profit.
Even if plant-based meat is not just a fad but a sustained and growing business, I think Beyond Meat will be hard-pressed to compete with the capital and economies of scale of the meat industry's longstanding leaders.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Teledyne Technologies and Beyond Meat highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – August 9, 2021 – Zacks Equity Research Shares of Teledyne Technologies Incorporated (TDY - Free Report) as the Bull of the Day, Beyond Meat, Inc. (BYND - Free Report) as the Bear of the Day.
Here is a synopsis of all two stocks:
Bull of the Day:
Teledyne Technologies is an excellent inflation play that provides shareholders with a nice mix of cyclical-value and innovation-driven profitable growth. Following its synergy-powered acquisition of FLIR System's last quarter, Teledyne is now positioned to drive significant double-digit top and bottom-line growth for the next couple of years. Analysts are increasingly optimistic about this stock, raising their near and long-term EPS estimates and propelling TDY into a Zacks Rank #1 (Strong Buy).
Teledyne's vast array of cutting-edge tech-driven products are utilized in critical industrial growth markets that heavily rely on its products. This allows the company to easily pass on its price increases to end markets with little to no margin deterioration.
TDY is an under-the-radar recovery stock that hasn't gained the market traction that I believe it deserves. You can see this from both its lack of analyst coverage and comparatively low daily volumes. Nevertheless, TDY shares are finally breaking out after 3 months of consolidation, with its most recent quarterly report being the impetus for its next leg higher.
TDY has been trading in a staircase pattern over the past 52-weeks. This peculiar trading pattern is not unusual for an overlooked stock such as this, as infrequent favorable headlines typically catalyze each step up. My next Fibonacci-derived price target, once TDY materially breaks above this $458 resistance level, is $495 on a technical basis. Still, the fundamental value is much closer to $525 or higher (15%+ upside from here).
Excellent Q2 Report Drives Bid
Teledyne Technologies blew its Q2 earnings out of the park, demonstrating record revenues, margins, and profits that far exceeded analysts' expectations. This industrial innovator also significantly raised its full-year EPS guidance by 27% from its Q1 projections, reflecting management's positive organic growth and synergy outlook from the recent FLIR acquisition (diluting shares by 25%, but offsetting that with robust, profitable growth).
The $8.1 billion acquisition of FLIR Systems has already provided positive synergies in its first few weeks under Teledyne's management. FLIR accounted for over $300 million of TDY's digital imaging revenues (more than 25% of Teledyne's total revenue) and combined with the division's organic growth, this segment was able to grow by 144% from the same quarter last year. Digital imaging now makes up more than half of the company's total top line. FLIR's cutting-edge sensory technology will be a strong tailwind for Teledyne in the coming years.
Even when ignoring the additional FLIR revenue, Teledyne exhibited double-digit organic sales growth for the first time since Q4 of 2019. The tailwinds from the economic recovery and further synergies from FLIR's integration will continue to drive record quarterly results moving forward. TDY is up just 4% since this report, meaning that you didn't miss this tremendous post-earnings buying opportunity. With the recent upward revisions and upgrades from its limited covering analysts, I don't see the bullish energy behind this stock waning anytime soon. After a quarter like that, these shares are cheaper than ever (on a valuation basis).
The Business
Teledyne is a high-growth industrial business categorized under aerospace & defense equipment in the Zacks database, but the company is so much more than that. According to the company website, Teledyne's end markets include "aerospace and defense, factory automation, air & water quality environmental monitoring, electronics design and development, oceanographic research, deepwater oil and gas exploration and production, medical imaging, and pharmaceutical research." Industries that are all at the forefront of this 4th Industrial Revolution, which is just commencing.
Final Thoughts
All 4 of the covering sell-side analysts on the ZRS platform are calling TDY a buy today, and I couldn't agree more. In addition, TDY's most recent analyst report was a particularly bullish call from a reputable firm of $540 a share (over 17% upside).
Every quarter it seems analysts are raising their price targets as Teledyne persistently exceeds analysts' estimates. Now that sensor/imaging powerhouse FLIR Systems is in the business mix, I expect to see accelerated success as the Roaring 20s take off.
Bear of the Day:
Beyond Meat is a meatless miracle with a valuation that has run far past this 'trendy' stock's intrinsic value. Sell-side analysts are beginning to rein in their expectations as the market euphoria surrounding this cliché new plant-based protein alternative dissipates, pushing BYND into a Zacks Rank #5 (Strong Sell).
BYND remains the one stock that stands out to me as overvalued on the Zacks Strong Sell list. I mean, you don't see many public equities that are 44% off their recent highs that still have 2 sell ratings, considering that analysts are not very likely to recommend something as a sell unless fundamentals are way out of whack with the share price.
I have been apprehensive about this glorified consumer packaged goods (CPG) enterprise since it hit the public exchanges in May 2019. The company was and remains unprofitable and faces massive competition that could quickly put this meatless fairytale out of business with leading players in the sector having far superior operational maturity.
Each quarterly report that Beyond Meat releases makes me further question its shareholders' rationality, who are keeping this increasingly profitless company at a double-digit forward P/S valuation.
In its Q2 report Thursday evening, BYND marginally exceeded revenue estimates but came in below Zacks Consensus Estimates for the 5th consecutive quarter. The company is getting further and further away from profitability every quarter, and despite experiencing sales growth abroad, its domestic performance has been abysmal.
Beyond Meat has seen massive topline deceleration over the past 4 quarters, seemingly unable to get back to those pre-pandemic triple-digit growth figures. The company was forced to put on over $1 billion in debt in Q1 to remain solvent. Everything I review about this business points to an inept management team on top of a lousy business model. BYND is uninvestable from my perspective.
Why I Don't Like The Stock
First and foremost, this small alt-protein meat enterprise will not be able to just waltz into the CPG space and completely monopolize this niche. The big meat industry players like Tyson Foods, JBS Holdings, Cargill Meat and Perdue are all making moves in the plant-based meat segment. These food giants' proven distribution and supply chain operations and longstanding corporate relationships will be leveraged to put this start-up out of business.
Granted, Beyond Meat has secured some lucrative partnerships with global fast-food giants like McDonald's and Yum! Brands have justified some of BYND's upward move. However, its revenue in this segment has been unpredictable.
I am worried that this is a fad among younger consumers (where the primary demand is originating). The fact that this new plant-based meat isn't actually healthier than real meat may reverse its already hampered growth. Beyond Meat's products are all highly processed, and some nutritionists are saying that this faux-meat may actually be less healthy than traditional options.
BYND has appreciated over 395% from its IPO price in May of 2019 (169% from its first publicly traded price) and is now falling out of market favor since it peaked in later January. The company is trading at a double-digit P/S multiple. Its deeper slips into a bottom-line and cash-flow deficit are a massive red flag for a company with such an uncertain future.
Final Thoughts
I'm not going to be putting on a position in BYND one way or the other because of the stock's inherent volatility and r/wallstreetbets interest. I don't believe in Beyond Meat's growth narrative and think there are too many risks at its current valuations, notably the risk of never turning a profit.
Even if plant-based meat is not just a fad but a sustained and growing business, I think Beyond Meat will be hard-pressed to compete with the capital and economies of scale of the meat industry's longstanding leaders.
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.