Update: Beyond Meat (BYND) – Still promising?

Beyond Meat (BYND) 

On Thursday, 5/6 Beyond Meat released its earnings as indicated below:

Revenue: Increased 11% to $108.2 million vs. $113.18 million expected

Profit:  -$0.42 vs. -$0.21 cents expected

Basically, the company missed both top and bottom line. But I still like this company, product, and the stock. Let me share my thoughts.

Last year the company had reported 143% revenue growth because of meat shortages and consumers were stocking due to the emergence of COVID. As such, it was a tough comparison. Having said that, retail net revenues increased substantially, 45% year-over-year. However, food service net revenues were down 34% comparing to last year as people did not physically go to the restaurants due to COVID. Beyond burger and its products are not only healthy and but let’s not forget the fact that BYND was the first company to enter to this new exciting space. UBS forecasts that plant-based protein sales would reach $51 billion by 2025 and some their analysts project $140 billion in next 10 years. UBS estimates that, plant-based meat alternatives still account for just less than 1% of combined meat and meat alternative volumes comparing to about 0.4% in 2018. The Consumers’ awareness, taste and understanding about plant-based food are slowly but gradually increasing. Almost 35% people in U.S are fully vaccinated as of date. These people could physically go to restaurants and business could pick up as more and more people gets vaccinated. 

Partnerships: BYND has exceptional partnership with big-name chains and retailers including Costco, Taco Bell, Subway, TGI Friday’s, Dunkin' Brands, Pizza Hut, Pepsi, McDonald, KFC, Burger King, CVS to name few. Beyond Meat has also collaborating with Yum China which includes KFC, Pizza Hut and Taco Bell. The company has also partnerships with Chinese e-commerce giant Alibaba's grocery stores. 

 

International Expansions: Beyond Meat said on Sept. 8 that it's building production facilities near Shanghai, China. This makes Beyond the first foreign vegan meat company to set up operations in the country. Beyond Meat announced the grand opening of its first production plant in China on April 7. The company said to be making a series of investments here in the U.S., in the EU, and in China. The company's focus is on "three key levers of taste, health, and cost" that’s expected to enable huge growth opportunity when it comes to mass adoption.

 

Competition: I keep hearing that many new players are coming to this space and hence becoming competitive. The new entrants always come wherever there are opportunities. Because everybody wants to share a piece of the lucrative market. Let’s just think for a moment, how many restaurants could be there in San Francisco Bay Area or more specifically say Asian restaurants. Probably, thousands of them but the good restaurants prosper, and the bad ones close their shops. In every industry there are leaders, laggers and some get into oblivion after few years. Gone are those days of monopoly and oligopoly. Survival of the fittest and in my view BYND is in this category.

 

My final thoughts: As the world continues to recover from pandemic and restaurant dining picks up Beyond Meat should benefit in the long haul. Hence, the long-term outlook for plant-based meat and particularly BYND looks compelling. Beyond Meat is the leader in this space, have right product, partnership, and strategies. The stock price has come down 52% in last few months providing a good opportunity to accumulate for the long term. I do not know where the share price will be in days or weeks or even months, but I keep a long-term vision and will not be surprised if share price gets doubled or more in the next 12-18 months. 

 

Disclaimer: This is NOT a recommendation to buy/sell the any stock but my own opinion. Every investor should do their due diligence and do what is best for them.  

 

NOTE: I have updated my Blog Portfolio today.