BYND: Is Beyond Meat a Buy On its Recent Dip?

Beyond Meat Inc. (BYND) develops, manufactures, markets and sells plant-based protein food products. Its products are available at approximately 112,000 retail and foodservice outlets in 85 countries worldwide, including approximately 26,000 retail outlets in the United States as of June 2020.

Growing demand for meat substitutes and multiple strategic partnerships have caused BYND to gain 143.6% year-to-date. Though the stock fell 10.1% since hitting its 52-week high earlier this month, its underlying business strength and growth potential makes it well positioned to surge through the remainder of 2020.

BYND’s impressive performance and the potential upside based on a number of factors have helped the stock earn a “Strong Buy” rating in our proprietary rating system. Here is how our proprietary POWR Ratings system evaluates BYND:

Trade Grade: A

BYND is currently trading above its 50-day and 200-day moving averages of $159.76 and $133.33, respectively, indicating an uptrend. Moreover, BYND has gained 139.4% over the past six months, reflecting solid short-term bullishness.

BYND’s net revenues increased 69% year-over-year to $113.3 million for the quarter ended June 2020, driven by increased retail channel sales, resulting from expansion in total distribution points, higher sales velocities at existing retail customers and new product introductions. The company continued expanding its outlets during the pandemic and has entered into partnerships with 59,000 food service outlets.

Last month, BYND announced a major expansion in its long-standing relationship with Walmart (WMT). As per the agreement, WMT plans to triple availability of the Beyond Burger from approximately 800 locations to more than 2,400 stores nationwide. Also, BYND introduced Beyond Breakfast Sausage earlier this month.

Buy & Hold Grade: A

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In terms of proximity to its 52-week high, which is a key factor that our Buy & Hold Grade takes into account, BYND is well positioned. The stock is currently trading just 7.3% below its 52-week high of $197.50, which it hit on October 8th.

BYND’s revenue increased 142.6% year-over-year, which can be attributed to its long standing relationship and high profile partnerships with restaurants and food delivery services such as WMT, Starbucks (SBUX), McDonald’s (MCD).

Peer Grade: A

BYND is currently rated #2 out of 28 stocks in the Agriculture industry. Other popular stocks in the agriculture group are Archer-Daniels-Midland Company (ADM), Nutrien Ltd. (NTR), and Bunge Limited (BG).

While ADM gained 8.5% year-to-date, NTR and BG declined 16.3% and 5.1%, respectively, over this period. This compares to BYND’s 143.6% returns year-to-date.

Industry Rank: B

The Agriculture industry is ranked #31 out of the 123 StockNews.com industries. While the agriculture industry bore the brunt of Covid-19, it has been recovering slowly. The companies have undertaken unique ways such as strategic partnerships in order to stay afloat during this pandemic.

Overall POWR Rating: A (Strong Buy)

BYND is rated “Strong Buy” due to its short-and-long-term bullishness, solid growth prospects, and underlying industry strength, as determined by the four components of our overall POWR Rating.

Bottom Line

BYND has the potential to soar in the upcoming months despite gaining 143.6% so far this year, based on its continued business growth, favorable earnings and revenue outlook, and strong financials.

BYND’s EPS is expected to grow at 144.8% this year and 376.9% next year. Moreover, BYND has an impressive earnings surprise history, as it beat the street EPS estimates in three of the trailing four quarters. The consensus revenue estimate of $131.44 million for the quarter ended September 2020 indicates nearly 43% growth from the same period last year. This outlook should keep BYND’s price momentum alive in the near term.

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BYND shares were trading at $179.43 per share on Tuesday afternoon, down $4.71 (-2.56%). Year-to-date, BYND has gained 137.34%, versus a 8.99% rise in the benchmark S&P 500 index during the same period.

About the Author: Manisha Chatterjee

Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...