Beyond Meat, Inc. (NASDAQ: BYND) is one of the fastest growing publicly-traded food companies in the United States, offering a portfolio of revolutionary plant-based proteins made from simple ingredients without GMOs, bioengineered ingredients, hormones, antibiotics or cholesterol. Figure 10: Implied Acquisition Prices for Value-Neutral Deal. If Beyond Meat can improve its NOPAT margin to 5% (equal to Tysons TTM margin) and grow revenue at 61% in 2020, 55% in 2021, and 47% in 2022 (consensus estimates) and by 20% compounded annually thereafter, the stock has significant downside risk. The Motley Fool has a disclosure policy. This report helps investors of all types see just how extreme the risk in BYND is based on: Growth Will Slow Down, but Competitors Wont. The original packaging did not display vegetables, and the words meat and best in the products names were not chosen randomly. Investors should note that maximizing customer acquisition through the retail channel will probably crimp the company's admirable growth rate, as future promotions and new iterations of discounted value packs will reduce the amount of recorded sales (net revenue), as we've discussed above. Showing that meat is not necessary to enjoy the same flavors while reaping more plant-based benefits. After tying up with Dunkin soon after its IPO, Beyond Meat entered China in 2020. Eat What You Love Buy These 2 Stocks in 2023 and Hold for the Next Decade, 2 Growth Stocks to Buy Before the Big Bull Rally, Join Over Half a Million Premium Members And Get More In-Depth Stock Guidance and Research, Copyright, Trademark and Patent Information. .css-16c7pto-SnippetSignInLink{-webkit-text-decoration:underline;text-decoration:underline;cursor:pointer;}Sign In, Copyright 2023 Dow Jones & Company, Inc. All Rights Reserved, adidas Promo Code - $30 Off 1000s of Best-Sellers + Free Shipping, 60% off running shoes and apparel at Nike without a promo code, Michael Kors promo code First Order: sign up for KORSVIP + Get 10% off. February 1, 2022 . This vision can be found throughout Beyond Meats marketing collateral. Beyond Meat Inc. is revamping its retail sales strategy to center on five major grocers and hiring a new marketing executive as part of .css-1h1us5y-StyledLink{color:var(--interactive-text-color);-webkit-text-decoration:underline;text-decoration:underline;}.css-1h1us5y-StyledLink:hover{-webkit-text-decoration:none;text-decoration:none;}an effort to reinvigorate the plant-based food makers business. What can you learn from this? Changes that have inspired the birth of Beyond Meat is the increased demand on plant-based products. Plant based burgers are not new but Beyond Meat has been able to capture more of the mainstream market. revenue grows at consensus rates in 2021, 2022, and 2023, and. Dont be afraid to really study the competition and pay attention to all the little details that have made them successful. Further, consensus estimates for Beyond Meats 2020 earnings are now $0.07/share. Balance Sheet: I made $290 million of adjustments to calculate invested capital with a net decrease of $228 million. Disclosure: David Trainer, Kyle Guske II, and Matt Shuler receive no compensation to write about any specific stock, sector, style, or theme. Whos to say that its red meat? Below are specifics on the adjustments I make based on Robo-Analyst findings in Beyond Meats 10-Q and 10-K: Income Statement: I made $33 million of adjustments, with a net effect of removing $21 million innon-operating income(5% of revenue). They only get anxious when they realize that they havent eaten something theyve come to believe they need., Beyond Meat believes that protein is protein and consumers shouldnt care if it comes from a plant or an animal. With the high expectations of consumers and the competition they were about to create, knowing that they got in during the right time when consumers would take it as a positive and embrace this new way to eating meat, or meat substitute.. Dollar figures in millions. Plant-based meats look like an attractive bet to play the future of food. (Photo by Smith Collection/Gado/Getty Images), BYND Operating Expense As Of Revenue Beyond Meat, BYND Current Valuation Implies Massive Revenue, BYND Implied Acquisition Prices For Value Neutral, BYND Implied Acquisition Prices For Value, See the math behind this reverse DCF scenario, directly correlated with creating shareholder value, The lack of competitive advantages that nearly all competitors possess, Doing the math: stock price implies huge increase in revenue/profits, Incogmeato by Morningstar Farms, owned by Kellogg Co. (K), Simply Plant-Based Meatless Burger, a SYSCO Corp. (SYY) exclusive product, Simple Truth plant-based meat, owned by The Kroger Co. (KR), Sweet Earth Brand, owned by Nestle (NSRGY), Happy Little Plants, owned by Hormel (HRL), Lightlife Foods, owned by Maple Leaf Foods, Shelf space large amounts of space, which can be very difficult to acquire, especially from firms like Kroger who directly control shelf space allocation, Marketing and advertising capacity existing businesses generate lots of cash flow that enables these firms to spend much more on marketing and advertising than Beyond Meat, Strong brand decades-long relationships with consumers across multiple brands that engender the trust that enables quicker adoption of newer products, Valuation implies massive improvement in profitability with sustained revenue growth rates, Domini Sustainable Solutions Fund (LIFEX) 3.4% allocation and unattractive rating. Figure 2: Beyond Meats Profitability vs. Beyond Meat is Wasting Its Advertising The company's strategy promotes plant-based meat as a category, not as a brand, which is ideal for its competitors Hermes Rivera via Unsplash From one perspective, Beyond Meat could hardly be in a better position. This does not boil down to just knowledge on slaughter houses, animal conditions, bacteria etc. In this scenario, Beyond Meat would earn ~$12.5 billion (slightly more thanMarketsandMarkets2019 estimated global plant-based meat market size of $12.1 billion) in revenue in 2031, compared to $401 million TTM. This is a major strength: a high speed-to-market. By constantly innovating, pivoting when necessary, and having a real eye for detail, in just under 10 years, Beyond Meat has become one of the biggest names in a previously unheard-of industry. I would prefer Beyond Meat align executives interests with shareholders interests and link executive compensation with improving ROIC, which isdirectly correlated with creating shareholder value. Invest better with The Motley Fool. Links: https://zaap.bio/lillytalavera. They exploit their established brand engagement to build more brand equity, at a low cost, because they dont pay a cent for restaurants to make this kind of indirect advertising for them. Beyond Meats success comes partially from the fact that it has been able to evolve alongside or prior to consumer demand. People are able to do extensive research on problems after recognizing that there is an issue. How? The redistribution of cash flow to its investors is a challenge. This adjustment represents 7% of Beyond Meats market cap. The founder, Ethan Brown, said in June that the companys objective is to make plant-based meat cheaper than animal protein. This is very rare: imagine if menus displayed all the product brands they use to cook the dishes you eat. Even though the number of vegans and vegetarians was increasing in 2013 when the company launched its first products, the market for plant-based burgers was small: only 0.5% growth in this category. strategy uncovers and shares the "bold vision, . Of course, this is wrong, and our body adapts to whatever we give it. Now, lets proudly assume what they are: a plant-based burger, extracting plant proteins to make a tasty and healthy burger. Probably not, considering that revenues are likely to grow almost 2.7x by 2023, with net income turning positive in 2022 and growing steadily thereafter, generating continued returns for shareholders. No more comparison with animal meat products: Beyond Meat has nothing more to prove, its products are famous, recognized as good for the palate and for our health. One of the most notable adjustments was $11 million inoperating leases. What kind of external factors/changes do you think may have inspired the birth of Beyond Meat? Leverage partners with larger platforms to expand reach. Though BYNDs margins remained negative at close to -13% in 2020 (due to the impact of the pandemic), the companys operations are expected to improve and turn profitable in 2022, with projected margins of 3%. Finally, innovation is another key element of success for Beyond Meat: if they are the leaders, lets not forget that it is also because their products are great, packed with plant-based proteins. This is one of the biggest first-day pop-ups in recent history. Moral of the story? Sounds too good to be true, right? Should Kellogg continue to push the marketing of Incogmeato and swiftly gain customers, investors may kiss the ultra-high expectations baked into BYND goodbye. The mission of the company is focused on plant-based meat alternatives, using pea and other plant protein isolates. Heres a high-quality portfolio to beat the market, with over 100% return since 2016, versus 55% for the S&P 500. A year ago, the consumer discretionary upstart's top line reflected the depth of its marketing and supply chain investment in the restaurant business: These sales were nearly identical to their retail counterpart: Source: Beyond Meat. KFC and Beyond Meat are partnering with YouTube star and influencer Liza Koshy to help reveal the debut. Jurgens brings over 20 years of experience with a proven record of growing sales and profit through strategy, branding, marketing, operational excellence and innovative approaches. If yes (which is the most common case), you can sell them to way more people and have an even greater impact. Increased U.S. foodservice and international channel net revenues were more than offset by reduced U.S. retail channel net revenues, which decreased 19.5% compared to the year-ago period. One venture capitalist even told Mackeythis: you know, John, I see you have got a pretty good business here, but it looks to me I looked at all the stores like you are a just a bunch of hippies and you are just selling food to other hippies and I dont think that is a very big market. He passed on investing in Whole Foods and ten years later that very same venture capitalist told Mackey that not investing in Whole Foods was the worst decision he had ever made. Theres no actual blood,instead beet juice isused but it does the trick. From the beginning Beyond Meat has viewed itself as a company that could take a typical meat eater and get them to consider a tasty alternative. Competition- Beyond Meat has created competition by completing innovating meat and how meat is viewed. To fight this incorrect belief, Ethan Brown launched a campaign featuring famous athletes. Now, if Beyond Meats revenues grow 2.7x, the P/S multiple will shrink by more than 60% from its current level, assuming the stock price stays the same, correct? Weve previously shown how linking executive compensation to faulty metrics such asadjusted EBITDAcan lead to the destruction of shareholder value. As the industry becomes more commoditized, economies of scale will be even more important for firms seeking profitability, which doesnt bode well for smaller firms such as Beyond Meat. Even more impressive is that Beyond Meat is, well, a food company (it develops plant-based meat products) and the sales for 2018 were only $87.9 million (and yes, the company has yet to post a . To make the world smarter, happier, and richer. Case in point, revenue grew 239% YoY in 2019, 141% YoY in 1Q20, and 69% YoY in 2Q20. The professors had been working on perfecting their formula for years, and the first Beyond Meat product launched in 2012 was their Chicken-Free Strips. Instead, due to theproliferation of noise traders, the focus tends toward technical trading tends while high-quality fundamental research is overlooked. Therefore, they have a lot of time and competitive advantage before others to create the most well-known category before all other competitors. In2016 Whole Foods decided to give the company a chance by placing Beyond Meat in its meat section. By 2015, even Walmart was selling Beyond Meats plant-based products! See the math behind this reverse DCF scenario. Given that most plant-based protein products are now aiming for the same goal imitating the taste and texture of meat it stands to reason that as the plant-based protein market matures, differentiation between products will diminish as all products begin to taste more and more like meat. A staff member at Business Insider that cooked and reviewed a Beyond Meat burger at homesaidthis about it: overall, it was tasty and juicy, unlike most veggie burgers which can often taste closer to cardboard than beef. Marketing is always easier when you have a great product because you dont have to try quite as hard to get people to try it as consumption spreads more organically over time via. With insiders quick to sell their shares and a large and growing short interest forming, it seems that others in the market are also unwilling to bet on the future hurdles Beyond Meat must clear. Eating plants is the best thing you can do for your diet. Plant based meats are not filled with dead animals which include bacteria growth and can contain other substances such as feces. Shares have fallen 10% since news onJune 25, 2020that McDonalds was discontinuing testing of a plant-based burger it dubbed the PLT made with a Beyond Meat patty in several Canadian markets. When it comes to social causes brands still need to remember if the product isnt good no social cause, no matter how important can save it. Figure 1: Consensus Revenue Growth Estimates: 2020-2025, 2020-2025 revenue growth rates based on consensus estimates, Competition is Plentiful and Has Competitive Advantages. As in all markets, there are leaders. Since its high-flying IPO at $46, this stock has soared to $135. For example, Kelloggs delayed the launch of its first round of Incogmeato products due to the COVID-19 pandemic. These expenses, and the need to maintain them to support Beyond Meats already declining growth, illustrate that the firm is not approaching economies of scale anytime soon. First, consumers expectations for new products and innovation will rise over time. Information Search- Consumers using this new information to do their own research on the history of slaughter houses and the conditions in which animals are being tortured and killed to create meat. But thats what BYNDs investors are betting will not happen! This is a full-time position, reporting to the Chief Legal Officer. Marketing News & Strategy Here's how KFC is marketing its updated Beyond Meat faux chicken in two markets Beyond Fried Chicken could go national if strong results are seen in Charlotte and. There are limits on how much Kraft Heinz should pay for Beyond Meat to earn a proper return, given the NOPAT or free cash flows being acquired. Previously, people were limited to information they see on television which is in the best interests of companies that can afford those ad campaigns. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. In fact, it has been shown that heart disease, cancer, and diabetes, three of the top ten causes of death, are linked to eating too much meat. Having the largest natural and organic food retailer in the United States take a chance on this relatively unknown brand gave other grocery retailers an incentive to try the same product placement in their stores. However, the fundamentals reveal this stock is more style than substance. Firstly, the gradual lifting of lockdowns in recent months will help the restaurant segment register strong growth along with sales from retail chains. the stock is worth just $30/share today - a 57% . But what if youre looking for a more balanced portfolio instead? Rising beef prices, coupled with the overwhelming at-home food consumption trend, present an unforeseen opportunity for the company to entice new customers by doubling down on grocery sales. Figure 7 compares the firms implied future NOPAT in this scenario to its historical NOPAT. Why? Figure 3 shows Beyond Meat spends 37% of its revenue on operating expenses (SG&A, R&D, and restructuring costs), which is well above peers. It began trading at $25/share on the Nasdaq stock exchange and ended the day at $65.75. Over the TTM, Beyond Meat removed $23.7 million (6% of revenue) in share-based compensation and $7.5 million in restructuring expenses (2% of revenue) when calculating adjusted EBITDA. Plus, they created a new category by being one of the first to do it and do it right. Since going public in early May, Beyond Meat's stock has soared more than 450 percent and its market value is over $8 billion. Beyond Meat, a producer of plant-based meat substitutes, was founded in 2009 in Los Angeles, California. Beyond Meat has earned a premium name thanks to its marketing strategies, but this premium is too much. Beyond Meat will face difficulty maintaining an innovative edge over its peers, who already spend much more on research and development (R&D). People tend to associate meat with strength, with muscles. Figure 6: Beyond Meats Adjusted EBITDA Misleads on Profitability, BYND Adjusted EBITDA Misleads On Profitability, Doing the Math: Valuation Implies Significant Disruption of the Entire Meat Industry. Beyond Meat is seeking a marketing, advertising, regulatory, and trademark attorney with 10-12 years of experience. After much anticipation, Beyond Meat announced a three-year partnership with McDonalds in February 2021, under which BYND will be McDonalds preferred supplier for the patty in the McPlant, a new plant-based burger being tested in select McDonalds markets globally. By Christopher Lombardo. Considering these competitors are already supplying plant-based protein products, Beyond Meat faces an increasingly uphill battle to reach the size it needs to match the cost efficiencies of larger competitors like these two established firms. Fourth Quarter 2021. Beyond Meat Narrows Its Losses. For example, Tyson Food, one of the biggest and earliest investors in Beyond Meat, which had a 5% stake in 2016 exited in 2019. The Motley Fool owns shares of and recommends Beyond Meat, Inc. BEYOND MEAT ANNOUNCES NEW . Many undercover operations are conducted to get footage and investigate what is really going on inside the slaughter houses. Each implied price is based on a goal ROIC assuming different levels of revenue growth. This would make growth in Beyond Meats stock price a real possibility in the next two years, taking its stock price to $200. last yearwhere it will: develop, produce and market snacks and beverages made from plant-based protein bringing together Beyond Meats innovation expertise with PepsiCos marketing and commercial capabilities. PepsiCo is known for its marketing prowess and just working with PepsiCo will expand Beyond Meats reach. Even with that success, Brown continues to think big . Beyond Meat was one of the most successful IPOs (Initial Public Offerings) of 2019. Changes that have inspired the birth of Beyond Meat is the increased demand on plant-based products. Beyond Meat Announces New Executive Leadership Appointments to Accelerate and Support the Company's Vision for Strategic Growth. The following table, covering Q2 2020, shows how drastically this dynamic has changed, as management has leaned into winning customers at the grocery shelf during a near-cessation in dining-out activities: Beyond Meat is now incentivizing potential retail customers to try its products via a limited-time offering it dubs the "Cookout Classic" burger value pack. This allows consumers to make their own informed decision. Though the firms revenue has improved from $298 million in 2019 to $401 million over the trailing-twelve-months, Beyond Meatscore earnings[1]have fallen from $6 million to $4 million over the same time. Various trademarks held by their owners. The main difference is that Impossible Foods takes its proteins from soy whereas Beyond Meat extracts it from peas. What can you learn from this? This is not by accident but instead by design. While Beyond Meat could continue to rally, it faces four challenges that. With these headwinds Beyond Meat had to convince meat lovers that its products passed the test. Beyond Meat, the company that is making eating plant-based protein mainstream continues to grow at a fast pace. Measuring Brand Awareness As Told By Marketing Experts, journalists who actually tasted the chicken reported. By focusing on their fresh foods, like their Beyond Burger patties which many agreed pulled off the meatless meat trick more convincingly they were able to put their time and effort into a product that was going to make them more successful in the long run. At the end of 2Q20, Beyond Meat had $222 million of cash and cash equivalents on its balance sheet. How Beyond Meat's Marketing Strategy Set it Apart . Big brands have started plant-based meats and substances that are more healthy in order to show that Beyond Meat is not the only plant-based guys in town and gain some market share.