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Beyond Meat (BYND) to Post Q3 Earnings: What's in the Offing?

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Zacks Equity Research
·4 min read
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Beyond Meat, Inc. BYND is likely to register an increase in the top line when it reports third-quarter 2020 results on Nov 9, after the closing bell. The Zacks Consensus Estimate for revenues is pegged at $136 million, suggesting a jump of 47.4% from the prior-year quarter’s reported figure. However, we note that the rate of sales growth is likely to decelerate on a sequential basis. The company had witnessed a surge of 69% in the last reported quarter.

The Zacks Consensus Estimate for earnings in the quarter under review has dropped a penny to 3 cents over the past 30 days. Moreover, the consensus mark suggests a decline of 50% from the figure reported in the year-ago period.

Beyond Meat, Inc. Price, Consensus and EPS Surprise

Beyond Meat, Inc. Price, Consensus and EPS Surprise
Beyond Meat, Inc. Price, Consensus and EPS Surprise

Beyond Meat, Inc. price-consensus-eps-surprise-chart | Beyond Meat, Inc. Quote

Key Factors to Note

Beyond Meat’s strong retail presence and focus on innovation and capacity expansion efforts are major top-line drivers. Also, lately, the company’s retail volumes have been gaining on increased at-home consumption amid coronavirus-led elevated stay-at-home trends. Incidentally, volumes in the last reported quarter were driven by higher retail channel sales, stemming from domestic and international distribution gains, increased sales velocities for current retail customers and contributions from new products. In fact, on its last earnings call, management said that based on its solid sales momentum in the second quarter, it remains optimistic about the company’s ability to capitalize on the opportunities ahead. This bodes well for the quarter under review.

Certainly, Beyond Meat has been benefiting from solid innovation. The company has introduced four retail products in 2020 itself — Beyond Breakfast Sausage Links, Beyond Meatballs, Cookout Classic and Beyond Breakfast Sausage. Apart from expanding the portfolio, Beyond Meat is engaged in strengthening its distribution network and e-commerce capabilities. Incidentally, the company recently announced an expansion to its distribution deal with Walmart, per which the availability of Beyond Burger will triple from nearly 800 to more than 2400 Walmart locations. Also, Beyond Meat doubled the retail distribution of Beyond Breakfast Sausage patties to close to 5,000 additional grocery locations in the United States, in September.

However, increased stay-at-home trends amid the pandemic have been dealing a blow to the company’s foodservice channel. Though many foodservice customers have reopened, they are operating as per local restrictions and continue to reel under an uncertain pandemic-led scenario. In its second-quarter earnings call, management said that it expects U.S. foodservice demand to remain soft through the rest of 2020 due to the continued rise in coronavirus cases. Apart from this, high COVID-19-related costs and any rise in promotional activities pose threats to margins.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Beyond Meat this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Beyond Meat currently has a Zacks Rank #5 (Strong Sell) and an Earnings ESP of +113.04%.

Stocks With Favorable Combinations

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season.

Purple Innovation PRPL has an Earnings ESP of +5.82% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Tyson Foods TSN has an Earnings ESP of +9.57% and a Zacks Rank #2.

Grocery Outlet Holding GO has an Earnings ESP of +10.76% and a Zacks Rank #2.

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