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Written by: Aditya Raghunath
Its been just over a year since Beyond Meat (NASDAQ: BYND) went public at a price of $25 per share. Beyond Meat stock is currently trading at $145 which means its has returned 480% for IPO investors. Since the start of 2020, shares have gained an impressive 92% compared to the S&P 500 and NASDAQ gains of -1.7% and 12.5% respectively.
But investors should note that Beyond Meat stock has been swinging wildly since its IPO. It touched a record high of $239.71 in July 2019 and then slumped to $48 in the COVID-19-led sell-off.
While BYND stock is expected to remain volatile and range-bound in the near-term due to macro uncertainties, it remains a top bet for long-term investors.
Beyond Meat- an overview
Beyond Meat is one of the fastest growing food companies in the world. It offers a revolutionary portfolio of plant-based meats. Beyond Meat builds meat directly from plants and this innovation enables consumers to experience taste, texture and other sensory attributes of popular animal-based products while enjoying the nutritional and environmental benefits of plant-based meat products.
The company’s has primary production facilities in Columbia, Missouri while its research and development and administrative offices are based out of El Segundo, California. Beyond Meat also uses co-manufacturers in various locations in the U.S. and last year commenced a co-manufacturing facility in Canada.
Beyond Meat sells to a variety of customers in the retail channel throughout the U.S. while in global markets it sells via distributors who purchase, store, sell and deliver company products.
BYND is part of a large and expanding market
One reason why investors should be optimistic about Beyond Meat stock is the company’s large and expanding addressable market. It continues to disrupt the largest category in food that is valued at $1.4 trillion at the global level and $270 billion in the U.S.
NPD’s research identified Beyond Meat as the largest and fastest-growing meat brand in the U.S. for the fourth quarter of 2019. In domestic markets Beyond Meat experienced velocity growth of 106% and grew 26 times faster than the largest competitive brand in the category. Its market share also increased by 830 basis points, compared to 2018.
It Q4 of 2019 BYND had four of the best-selling SKUs in plant-based meats despite an increase in competition. The company’s sales were up a massive 239% year-over-year at $297.9 million in 2019. In the first quarter of 2020, Beyond Meat increased sales by 141% to $97.1 million.
Beyond Meat is banking on its already huge presence in the U.S. where products are available at 25,000 retail stores and 35,000 foodservice outlets. Comparatively, in the international markets, Beyond Meat products are present in 18,000 retail outlets and 17,000 foodservice outlets.
The long-term prospects for the company remain intact given increasing consumer awareness with regards to the benefits of plant-based eating. While Beyond Meat considers there is tremendous scope for improvement in perfecting the taste and texture of plant-based meat products it is making it significantly easier for people to switch diets.
Its household penetration in the U.S. stands at a paltry 3.6% while its distribution is just 4% of total domestic restaurants. When it comes to international markets, BYND is just testing waters and has massive potential to grow multifold sales. Beyond Meat recently partnered with Alibaba (NYSE: BABA) to gain traction in Mainland China.
The verdict
Beyond Meat is valued at $9 billion but is part of a multi-billion-dollar market. It is valued at 20 times forward sales which might seem expensive. However, analysts expect sales to rise 54.4% to $460 million in 2020 and 53.5% to $706 million in 2021. Comparatively, its earnings are estimated to grow by 150% this year and 336% in 2021, making it a top pick among growth stocks.
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