Shares of Beyond Meat (BYND - Free Report) jumped over 3% in early morning trading Friday to help extend the newly public, plant-based meat company’s stellar May. BYND stock has soared as the market falls and stands in contrast to Uber (UBER - Free Report) and Lyft (LYFT - Free Report) . So, let’s see if investors should consider buying Beyond Meat stock heading into the company’s first-quarter fiscal 2019 earnings release.
Beyond Meat was founded in 2009 and today sells what it calls plant-based meat. The firm’s portfolio is currently made up of burger patties, sausage (brats and hot Italian), and beef crumbles for pasta and tacos. The patties are made from four main ingredients: water, pea protein isolate, canola oil, and refined coconut oil. Unlike some vegetarian burgers, Beyond Meat aims to mimic the taste, consistency, and cooking profile of animal meat. It is important to know that BYND sees its customers as meat eaters, not necessarily vegetarians or vegans.
The company’s ability to attract meat eaters to its plant-based offerings will be vital because only 5% of Americans say they are vegetarians, according to a 2018 Gallup poll—unchanged from 2012. Overall, Beyond Meat wants to attract consumers to what it calls the “The Future of Protein,” based on larger, more humanitarian-esque goals. Part of the El Segundo, California-based company’s goal is to create a “better way to feed the planet,” according to its mission statement.
“By shifting from animal, to plant-based meat, we are creating one savory solution that solves four growing issues attributed to livestock production: human health, climate change, constraints on natural resources and animal welfare.”
As we touched on at the top, shares of BYND have skyrocketed roughly 50% since opening May 2 at $46.00 per share. In fact, the stock climbed 163% in its first day of trading to close at $65.75 per share, which was the biggest first-day pop for a company raising more than $200 million since the height of the dot-com boom. BYND shares opened Friday at $100.00 and the company boasts a market cap of $5.821 billion. Despite the impressive market cap, Beyond Meat lost nearly $30 million in 2018 on revenue of roughly $87.9 million.
Beyond Meat stock is clearly red hot and the firm has a range of high-profile athletes, including Houston Rockets star Chris Paul, as brand ambassadors to help convince customers that its products offer suitable protein and more. Beyond Meat can now be found in grocery stores such as Safeway, Publix, Kroger (KR - Free Report) , along with restaurants such as Carl’s Jr. and Del Taco.
On the more speculative side, McDonald's (MCD - Free Report) CEO Steve Easterbrook commented earlier this week on the possibility of the fast-food giant partnering with a firm like Beyond Meat. And Jefferies analysts wrote in a note Tuesday that “Beyond Meat is well positioned to partner with McDonald's,” and that a deal “makes sense for both parties.”
The firm grabbed roughly 2% of the alternative meat market in 2018, according to research firm Euromonitor. And meat alternatives currently account for around 5% of the total meat market. Meanwhile, Kellogg-owned MorningStar Farms captured the largest market share at 17%, with Kraft Heinz’s (KHC - Free Report) Boca brand at roughly 4% last year.
Investors should also note that one of BYND’s main rivals, Impossible Foods, which could go public soon, has made its way into Burger King and many other restaurants. Maybe most importantly, traditional meat industry giants like Hormel Foods (HRL - Free Report) , Tyson Foods (TSN - Free Report) , Cargill, and others are reportedly set to roll out their own plant-based meat offerings sooner than later.
Moving on, our current Zacks Consensus Estimate calls for the company to report an adjusted quarterly loss of $0.14 per share in Q1. Beyond Meat’s is then expected to report an adjusted full-year loss of $0.28 per share. With that said, investors and Wall Street don’t care about the company’s earnings at this time as it is still firmly in its growth phase. Nonetheless, the firm’s fiscal 2020 earnings are projected to surge nearly 90% above our current year estimate to a loss of just $0.03 per share.
At the top of the income statement, BYND is projected to report Q1 fiscal 2019 revenue of $38.66 million— there are no comparable results from the year-ago period. With that said, the company’s fiscal 2019 revenue is projected to soar 133% from $87.9 million in 2018 to $205.5 million. Peeking further ahead, BYND’s fiscal 2020 revenue is projected to climb 60% above our current year estimate to reach $330.1 million.
Beyond Meat is currently a Zacks Rank #3 (Hold) that has seen its stock price climb extremely quickly. The firm clearly shows signs of growth. But, Beyond Meat will soon have to face steep competition in a market that remains extremely uncertain.
BYND could be a home run-style stock for investors to consider at the moment. However, with shares of Beyond Meat up so big, its first earnings release as a public company will be a huge test. Therefore, it might be wise to see how Wall Street reacts to BYND’s Q1 results and guidance as a post-release selloff could be on the horizon, which would set up a far more enticing buying opportunity.
Beyond Meat is scheduled to report its first-quarter fiscal 2019 financial results after the market closes on Thursday, June 6. Make sure to head back to Zacks for a complete breakdown of its actual quarterly metrics.
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