Beyond Meat (NASDAQ: BYND) released its Q2 2020 earnings on Tuesday (August 4, 2020). The shares dropped 6.72% the following day to $132.69. In this post, I’m going to go over 8 things you need to know about the earning report and whether or not I think BYND is a buy.
The year-over-year (YOY) net revenues growth year-to-date (YTD) was 96%, rising from $107.5 million to $210.4 million. As incredible as this may sound, it was a huge deceleration from the previous year. From 2018 to 2019, YOY growth was 239%. The deceleration can largely be attributed to COVID-19. Many BYND foodservice customers were forced to close.
I view the 96% growth as very positive given the situation. Once economies re-open, I expect BYND growth to re-accelerate.
Beyond Meat had about a 3x increase in manufacturing capacity YOY at the end of Q2 2020. This is extremely important because of what’s going on at food plants across the U.S. Tyson Foods is the best-known example of food plants closing due to COVID-19.
As these plants stay closed, it gives BYND a huge opportunity to take market share. BYND’s supply chain execution has been phenomenal.
The last 52-week YOY velocity growth and market share growth were incredible at 179% and +848 basis points, respectively. But they, too, have been decelerating. I’m looking for these growth areas to accelerate after the pandemic.
U.S. foodservice net revenues grew 16% YTD. Given the headwinds of COVID-19, I view this growth to be very promising. It shows that BYND is very capable of overcoming obstacles.
BYND continued to expand its foodservice partnerships. One notable partnership was with KFC. There were limited test offerings at select KFCs. Many of these test offerings sold out within a few weeks. This is exciting news for BYND as one of its primary strategies is to build out its partnerships.
Beyond Meat’s products are now available in 84 countries worldwide (ex. U.S.). It added ten new countries since March 2020, including Brazil. I think that Brazil will be a huge opportunity for BYND.
There was $7.5 million of costs associated with COVID-19. $5.9 million came from repacking products that were previously scheduled for foodservice. $1.6 million came from COVID-19 related donations.
Prior to the pandemic, there was a 50/50 split between foodservice and retail. That mix quickly changed to 12/88 foodservice to retail.
Total U.S. multi-outlet natural and specialty channel sales increased 121% for Beyond Meat while the plant-based meat category sales grew 57% as a whole. BYND doubled the performance of the entire category, which was incredible.
BYND is an incredible growth company that’s executing at a high level. Its market cap is $8.2 billion based on the August 5th closing price of $132.69 and 61,679,929 basic shares outstanding from the most recently filed 10-Q.
If revenues increase at a 50% pace, annual revenues could reach $3 billion by the end of 2025. Applying a price-to-sales multiple of 5 would mean a $15 billion market cap. A multiple of 10 would make it $30 billion. Given these assumptions, I think that Beyond Meat stock can double in the next 5 years.
I plan on buying shares as long the market cap remains under $10 billion.
DISCLAIMER: I'm not a financial advisor. These are my opinions and provided "as-is". It is not an offer to buy or sell securities. Read the Terms and Conditions.
So what do you think about BYND? Leave me a comment below. Thanks for reading.
I/we own shares of BYND
Except for Wolves of Investing, I/we are not receiving any compensation from and do not have any business dealings with any companies whose stocks are discussed in this article.
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Donnie Nguyen is the founder and CEO of Wolves of Investing. He started investing in the stock market in the early 2000s. He follows the teachings of Peter Lynch, Warren Buffett, and other investing legends. When he's not investing or blogging, he loves spending time with his family traveling and experiencing the world.
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