29 Jul

What to Expect from Beyond Meat’s Q2 Earnings Today

WRITTEN BY Rajiv Nanjapla

Analysts’ expectations

Beyond Meat (BYND) plans to report its second-quarter earnings today after markets close. For the quarter, analysts expect the company’s revenue to rise over 200%. However, analysts believe the company will incur a net loss during the quarter.

What to Expect from Beyond Meat’s Q2 Earnings Today

Beyond Meat’s revenue growth

For the second quarter, analysts expect Beyond Meat to report revenue of $50.7 million, a rise of 203.5% from $17.4 million in the corresponding quarter of 2018. The growth in both the retail and Restaurant and Foodservice segment is projected to drive the company’s revenue. The rise in the number of retail and foodservice points of distribution, increased demand from existing customers, and the introduction of Beyond Burger in grocery stores across the US could drive the company’s revenue. However, the company discontinued its frozen chicken strips product line in the first quarter of 2019. The company’s decision to discontinue the frozen chicken strips product line could offset some of BYND’s revenue growth.

BYND to report a net loss

Analysts forecast Beyond Meat’s net loss to come down in the second quarter. For the quarter, the company’s net loss is projected to come at $4.5 million or a loss of $0.09 per share. In comparison, the company’s net loss was at $7.4 million in the corresponding quarter of 2018.

What to Expect from Beyond Meat’s Q2 Earnings Today

Stock performance

Since its IPO on May 2, Beyond Meat’s stock has been on a golden run. The company had priced its IPO at $25. As of July 26, the company was trading at $239.40, a rise of 839.6% from its IPO price. The impressive first-quarter performance, healthy outlook, new product development, and new partnerships have led to a rise in the company’s stock price.

On July 24, Dunkin’ Brands introduced the Beyond Sausage Breakfast Sandwich with Beyond Meat’s sausage patty made of 100% plant-based ingredients. Earlier, on June 12, Tim Hortons of Restaurants Brand International (QSR) had introduced Beyond Meat Breakfast Sandwiches in 4,000 of its restaurants in Canada. Also, the company launched a new product Beyond Beef in the last week of June, which was designed to replicate traditional ground beef.

Valuation multiple and analysts’ recommendations

We have considered the forward EV-to-sales multiple for analysis. As on July 26, the company was trading at a forward EV-to-sales multiple of 48.9x. In comparison, peers, Tyson Foods, Conagra Brands, General Mills, and Mondelēz International were trading at a forward PE multiple of 0.93x, 2.28x, 2.72x, and 3.68x, respectively.

Beyond Meat is still in a growth phase, and has a considerable scope to expand. In May, Barclays’s analysts projected the alternative meat market to reach $140 billion over the next decade. The scope for expansion has allowed the company to trade at a higher valuation multiple than its peers.

Ahead of its second-quarter earnings, analysts favor a “hold” rating for Beyond Meat. All eight analysts that follow the company have given it a “hold” rating. On average, analysts’ price target for BYND stands at $115.67, a fall of 50.8% from its current stock price.

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