Is Beyond Meat (BYND) Beyond Saving?

Few stocks illustrate the boom and bust of a fad like Beyond Meat (BYND)…maybe Peloton, but that’s a story for another time.

Despite the product’s popularity and some notable deals inked early on, Beyond Meat has encountered many problems.

In fact, shares are down over 95% from their highs just a few years ago, trading at under $10 per share.

With the company burning cash every quarter, is Beyond Meat Beyond Saving?

Beyond Meat’s Business

Cholesterol and heart disease go hand in hand.

And since heart disease is the number one killer in the U.S., a cholesterol-free meat replacement that tastes like meat should be quite popular.

That’s how Beyond Meat broke into the packaged foods industry in a big way.

The company provides consumers with a sustainable and delicious alternative to animal-based meat products.

Its plant-based beef, pork, and poultry are available in over 65 countries and in over 130,000 retail and foodservice outlets.

Why are their products different from earlier innovations like black bean burgers?

Because they taste good and pretty darn close to actual meat.

The only thing is, they come with high amounts of fat.

Beyond Meat segments its business into the following areas:

• U.S. Retail (49% of total revenues) – Encompasses sales to the U.S. retail market and to The Planet Partnership (TPP), a joint venture with PepsiCo.
• U.S. Foodservice (16% of total revenues) – Includes sales to restaurants and foodservice outlets in the U.S.
• International Retail (17% of total revenues) – Comprises retail sales to international markets, including Canada.
• International Foodservice (18% of total revenues) – Consists of sales to restaurants and foodservice outlets in international markets, also including Canada.

Beyond Meat’s sales are falling as the company grapples with weak demand in the plant-based meat category, increased competition, and concerns about the health attributes of its products. 

The decision to discontinue the Beyond Meat Jerky line has also contributed to the decline as part of a broader strategic review to cut costs and focus on margin expansion.

Despite efforts to optimize production and reduce expenses through its Global Operations Review, Beyond Meat continues to struggle with profitability and cash generation. 

Financials

Source: Stock Analysis

Sales have dropped rapidly since 2021. Yet, that’s not the company’s biggest problem.

As far back as 2016, Beyond Meat has never generated cash from operations.

While the burn rate has slowed, it’s still at almost $100 million annually. 

That’s a big problem when you only have $158 million in cash on your balance sheet and over $1.2 billion in debt.

The company hasn’t had to raise capital since 2021, when it issued its debt. But at the current pace, it will need to do something within the next year.

Valuation

Source: Seeking Alpha

Beyond Meat is the oddball in the packaged foods category. Nearly every other company we looked at generates a profit or at least positive cash from operations.

Companies like Kraft Heinz (KHC) and Smuckers (SJM) trade at around 10x cash and earnings, making them some of the cheaper stocks in the sector.

Growth

Source: Seeking Alpha

Overall, the entire packaged foods industry is seeing sales slip. However, most companies, except for Beyond Meat, expect that to end in 2024.

Even B&G Foods (BGS), only expects sales to drop 2.9%, less than half of what Beyond Meat is projecting.

Profitability

Source: Seeking Alpha

At the end of the day, Beyond Meat has a profitability problem.

Without a positive gross margin, it doesn’t stand a chance.

Our Opinion 0/10

We don’t believe Beyond Meat has enough of a competitive advantage to turn things around.

It’s been mismanaged from the get-go and needs to be acquired before it goes bankrupt.

We’d steer clear of this stock and look to other established packaged foods companies if you want to play this sector.