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Can Beyond Meat’s Q3 Earnings Justify Its Sharp Rally?

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Beyond Meat stock has surged over 135 percent this year and has outperformed the S&P 500 by a wide margin. The company needs to justify the surge with commensurate earnings. When does Beyond Meat report its earnings? What do analysts project for the plant-based meat producer?  

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Source: Beyond Meat

Beyond Meat’s earnings date

So far, Beyond Meat hasn’t released the date for its third-quarter earnings. Usually, the company reports its earnings on the first Tuesday in the second month after the quarter ends. However, since the U.S. presidential election is on the first Tuesday in November, Beyond Meat might change its reporting pattern in the third quarter.

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What do analysts project for Beyond Meat’s Q3 earnings?

According to the estimates compiled by Tikr, analysts expect Beyond Meat to report revenues of $132 million in the third quarter, which is a year-over-year rise of 43 percent. The expected growth rate is lower than the 68 percent and 141 percent revenue growth that the company reported in the second and first quarters, respectively.

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Analysts expect Beyond Meat to report an adjusted EPS of 5 cents in the third quarter, which is 15.2 percent lower than what the company reported in the third quarter of 2019. Analysts also expect Beyond Meat to report an adjusted EPS of 5 cents in the fourth quarter. 

Beyond Meat's stock price has soared in 2020

Beyond Meat stock has soared more than 135 percent this year. However, the stock is down almost 10 percent from its 52-week high of $197.50, which it hit earlier this year. Despite the recent correction in the stock prices, analysts expect more downside for the Los Angeles-based company.

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Analysts are forecasting a downside for Beyond Meat stock

According to the data compiled by TipRanks, Beyond Meat has an average target price of $135, which represents a potential downside of 24 percent over the current prices. The stock is trading near its highest target price of $180. Among the 15 analysts covering Beyond Meat, two have a buy rating, seven have a hold rating, and six analysts have a sell rating.

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Beyond Meat has seen strong growth amid the increase in demand for plant-based meats. While it had the early mover advantage in the space, many established food companies including Nestle, Kellogg, and Tyson Foods have also made a foray into plant-based meats. There is also Impossible Foods, which is Beyond Meat's closest competitor. 

Beyond Meat will need to keep innovating to compete with its bigger rivals that have deep pockets and capabilities. These companies also have extensive distribution channels that will help them in product penetration. Nestle developed a plant-based seafood product in nine months. Beyond Meat trades at an NTM EV-to-revenue multiple of 18.4x, which looks expensive based on the risk-reward scenario.

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