I’ve always had mixed opinions about Beyond the burger (NASDAQ:BYND) Inventory. There’s definitely a lot to like about Beyond Burger. For example, its burgers are quite tasty and its brand name has become quite powerful.
But there’s also a lot not to like about the company and BYND’s stock, including the company’s products outside of burgers (I don’t care much about that), its revenue decline at last quarter and its lack of profits.
In the paragraphs below, I will discuss the strengths and weaknesses of the company, and then deliver a verdict on BYND stock.
Beyond the forces of meat
As I suggested in my intro, I enjoy the company burger. I think they’re tasty and I like the idea that they’re making it easier to feed an ever-growing world population. (Cows need a huge amount of grass to eat, whereas only a small amount of pea protein is needed to make Beyond Burgers.).
And more than one stock-picking expert has suggested that buying stocks of companies whose products you use is a good strategy. (This strategy had mixed results for me, though.)
I also admit that as someone close to my dog and cat, thinking about eating other mammals sometimes makes me less enthusiastic. I’m sure many others have similar feelings.
Additionally, Beyond Burger has had significant success penetrating certain restaurant chains; for example, I like to eat them in my local Denny’s (NASDAQ:DENN) restaurant and Boomer Jack’sa chain of bars/restaurants.
Meanwhile in January, McDonald’s (NYSE:MCD) decided to offer the McPlant burger, which it developed in collaboration with Beyond Burger, in 600 other of its restaurants. Not to be outdone, Yum Brands‘ (NYSE:YUM) Kentucky Fried Chicken began selling Beyond Meat fried chicken in all of its U.S. restaurants last month.
Also, as I stated earlier, I think the company has gained quite a significant brand advantage over its rivals, with the exception of Impossible Foods, which makes the Impossible Burger.
On Jan. 31, Barclays raised its rating on BYND stock by two levels, saying the stock was undervalued.
Beyond Burger Weaknesses
As I stated above, I’m not a huge fan of Beyond’s products other than their burgers; specifically, I was disappointed with its sausage and plant-based ground beef offerings.
Also, as I wrote before, the company’s burgers aren’t very healthy, so I always thought they could lose a lot of market share if a competitor developed an equally tasty but healthier burger healthy.
Although the Beyond Burger brand is strong, the company has many other competitors, including impossible foods and whole foods’ offerings.
And as many others have pointed out, Beyond Burger is still not profitable. For the fourth quarter, for example, its EBITDA loss, excluding certain items, was nearly $63 million. Additionally, revenue from its U.S. retail segment (meaning its sales to supermarkets and other chains) fell nearly 20% year over year. to reach $50 million.
Is the glass half full?
On the other hand, its revenue comes from the restaurant segment in the United States. (meaning its revenue from restaurants and their suppliers) jumped nearly 35% year-on-year. And its revenue for all of 2021 was $464.7 million, compared to $406.8 million in 2020 and $298 million in 2019.
During his fourth quarter earnings conference call, CEO Ethan Brown said that as the pandemic subsides, the company’s revenue growth should accelerate as their customers and consumers will be less impacted by the coronavirus and the company’s international growth will accelerate.
Regarding profitability, Brown said in a statement: “While we will continue to invest in 2022, we expect to significantly moderate our operating expense growth by leveraging the building blocks we now have in place. .”
During the conference call, the CEO added, “We’ve put together some really fantastic opportunities that we can run against over the next 12 to 18 months, and we’re now entering that phase.”
The Basics of BYND Stocks
Beyond Burger and BYND stocks have real potential. If the company’s growth accelerates and its results improve in the future, stocks will almost certainly rebound. And that scenario could very well unfold as Beyond cuts costs, expands overseas, and overcomes demand and supply issues caused by Covid-19. Of course, I think improvements to its non-burger products would also help.
The shares once had a high valuation, but are now changing hands at a reasonable rate of 3.9 times analysts’ average estimates for 2023, based on data from Yahoo finance.
But for now, given Beyond’s declining Q4 revenue, lack of profitability, and risk, I view BYND stock as a “shown” name. However, if the company shows signs of beginning to achieve its goals and its valuation does not rise too high, its shares could be worth a bite later.
As of the date of publication, Larry Ramer had no position (directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.