đ„ Beyond Meat - $BYND
đ± Product
Beyond Meat produces plant-based meat substitutes for supermarkets and the restaurant industry.
The companyâs flagship product is the âBeyond Burgerâ which is made from a combination of pea protein and plant-based fats. The end result is a product with a similar taste and texture to a conventional burger made from beef.
Beyond Meat also has an impressive number of other products and partnerships with some of the biggest names in the fast food industry. These include:
McDonaldâs - November 2021 pilot scheme in 8 restaurants in the US resulted in âMcPlantâ burgers selling 3 times more than expected. On average 70 plant burgers were sold per day at the test locations, approaching the popularity of the traditional Big Mac at 110 items per day. A new roll-out to 600 additional McDonaldâs restaurants is expected in February.
KFC - started testing âBeyond Fried Chickenâ at KFC outlets in the Atlanta-area and other major US cities in 2019. Earlier this month the company reported they will start a nationwide roll-out of their plant-based chicken product.
Pizza Hut - launched âBeyond Italian Sausage Pizzaâ and the âGreat Beyond Pizzaâ products in 2020 throughout the US. In early January this year they announced âBeyond Italian Sausage Crumblesâ will be released at Pizza Hut locations across Canada.
đ Financials
Price-to-sales ratio:
Beyond Meat is a good case study to look at the price-to-sales (P/S) ratio. This should not to be confused with the more well-known price-to-earnings (P/E) ratio. A simple way to look at it is that P/E is based on profit (earnings), whereas P/S is based on revenue (sales).
Why look at revenue and not profit? This is because high-growth tech companies donât typically reach profitability straight away. The company may be growing so fast that they need to reinvest revenues back into the business rather than immediately book their profits. If they are consistently growing revenues at a high rate, the market may âpay a premiumâ for the business. This premium will be reflected in the companyâs stock price and P/S ratio.
A high P/S ratio relative to the overall market could also be a sign that the stock is over-hyped or over-valued.
Beyond Meat Key Figures:
P/S Ratio: 8.85. The P/S ratio for the whole S&P 500 index is currently at 2.851. Tesla and Netflix, considered to be the archetypal highly-valued growth stocks are at 22.74 and 5.52 respectively.
Market Cap: $4.12bn. (Tyson Foods, one of the largest meat producers in the US is valued at $33.15bn).
Negative operating income of almost $54m in Q3 2021. This figure has got worse since Q3 2020 when they made a loss of $18.456m.
Quarterly Revenue Growth (compared to the same quarter in the previous year): 12.7%.
Total Cash on the balance sheet in Q3 2021: $886.44m
R&D made-up just over 19% of the companyâs operating expenses in the latest quarter. Selling, general, and administrative (SG&A) was over 73% - which mainly includes sales and marketing costs. Lastly, 7.5% of total expenses were spent on restructuring. The full breakdown of expenses quarter-by-quarter can be seen below:
đš đ© Leadership
The CEO of Beyond Meat is Ethan Brown. Beyond some minor biographical details you can find on Wikipedia it is difficult to assess the personality and personal commitment of any CEO.
Instead of looking at career history or past credentials, I suggest a better way to judge an executive is to find out how much personal âskin in the gameâ they still have in the company. This can be done by looking at a CEOâs filings with the SEC to see how many shares theyâve sold, which by US law they must disclose. At the end of the day, in stocks as in life, actions always speak louder than words.
On May 3rd 2019, one day after Beyond Meatâs initial public offering (IPO), Brown sold 45,000 shares worth $7.2m at the time. His total allocation was 1,604,027 shares which was the equivalent of almost $257m.
Since then Brown has sold a total of 5,600 shares at different stock prices. As a percentage these sales represent just 0.34% of his total equity in the company.
đ Bull Case
The global meat market is valued at $1.4T. Thatâs a big market with plenty of expansion potential. As a first-mover in the space, Beyond Meat is well-positioned to take advantage of the shifting trends towards plant-based products.
The companyâs P/S ratio is worse than Netflix and the overall S&P 500 index but still much better than Tesla. If Beyond Meatâs ratio goes down further due to the uncertain macro environment, investors might be able to get a bargain for a company which is still showing strong revenue growth.
CEO Ethan Brown has only sold a tiny fraction of his overall shares in Beyond Meat since it went public in 2019. This is a positive sign showing he remains personally committed to the company.
The nationwide roll-outs of Beyond Meat products at major fast food chains in the US and Canada could also improve revenue and profitability for the business. If the company can also successfully expand to international markets thatâs bullish news for the stock.
đ» Bear Case
Beyond Meat will face growing competition in the near future from similar players such as Impossible Foods, another âclean meatâ company also planning to go public on the stock market this year. This will also have an impact on Beyond Meatâs profitability as they will have to keep prices low to ward off competition.
Itâs surprising that sales and marketing make-up such a large percentage of operating expenses, especially compared to R&D. If the company doesnât need to spend much on R&D it could mean that they donât have a significant âmoatâ or technological edge over competitors.
The huge price swings in the stock since the IPO seem to be more to do with internal stock market dynamics such as squeezing short sellers rather than the fundamentals of the company.
What did I miss? - These reports are a learning process for me and Iâm very open to constructive feedback and suggestions.
What stock or crypto asset should I cover next? You can contact me by email: hellorobostox@gmail.com or feel free to leave your response in the comments below. You can also follow me on Twitter: @daneasterman.
Disclaimer: I am not a financial advisor, none of this report should be taken as financial advice. Instead this should be viewed as starting point to conduct your own research. I do not hold any positions in Beyond Meat stock at the time of writing.