Beyond Meat (NASDAQ:BYND) Posts Better-Than-Expected Sales In Q4, Stock Jumps 29.9%
Plant-based protein company Beyond Meat (NASDAQGS:BYND) reported Q4 FY2023 results topping analysts' expectations , with revenue down 7.8% year on year to $73.68 million. On the other hand, the company's full-year revenue guidance of $330 million at the midpoint came in 4.2% below analysts' estimates. It made a GAAP loss of $2.40 per share, down from its loss of $1.05 per share in the same quarter last year.
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Beyond Meat (BYND) Q4 FY2023 Highlights:
Revenue: $73.68 million vs analyst estimates of $67.11 million (9.8% beat)
EPS: -$2.40 vs analyst estimates of -$0.88 (-$1.52 miss)
Management's revenue guidance for the upcoming financial year 2024 is $330 million at the midpoint, missing analyst estimates by 4.2% and implying -3.9% growth (vs -15.7% in FY2023)
However, gross margin and implied operating profit guidance for the upcoming financial year 2024 were both much better than expectations
Free Cash Flow was -$30.54 million, down from $7.63 million in the previous quarter
Gross Margin (GAAP): -114%, down from -3.7% in the same quarter last year
Sales Volumes were up 8% year on year
Market Capitalization: $480.8 million
Beyond Meat President and CEO Ethan Brown commented, “In 2023, Beyond Meat undertook extensive initiatives to reset the business toward sustainable operations and, ultimately, profitable growth. Much of this reset is now coming into view.”
A pioneer at the forefront of the plant-based protein revolution, Beyond Meat (NASDAQGS:BYND) is a food company crafting innovative, sustainable, and delicious alternatives to traditional meat products.
Packaged Food
As America industrialized and moved away from an agricultural economy, people faced more demands on their time. Packaged foods emerged as a solution offering convenience to the evolving American family, whether it be canned goods, prepared meals, or snacks. Today, Americans seek brands that are high in quality, reliable, and reasonably priced. Furthermore, there's a growing emphasis on health-conscious and sustainable food options. Packaged food stocks are considered resilient investments. People always need to eat, so these companies can enjoy consistent demand as long as they stay on top of changing consumer preferences.The industry spans from multinational corporations to smaller specialized firms and is subject to food safety and labeling regulations.
Sales Growth
Beyond Meat is a small consumer staples company, which sometimes brings disadvantages compared to larger competitors benefitting from better brand awareness and economies of scale.
As you can see below, the company's revenue has declined over the last three years, dropping 5.5% annually as consumers bought less of its products.
This quarter, Beyond Meat's revenue fell 7.8% year on year to $73.68 million but beat Wall Street's estimates by 9.8%. Looking ahead, Wall Street expects sales to grow 1.9% over the next 12 months, an acceleration from this quarter.
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Cash Is King
Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can't use accounting profits to pay the bills.
Beyond Meat burned through $30.54 million of cash in Q4, representing a negative 41.5% free cash flow margin. The company increased its cash burn by 51.7% year on year.
Over the last two years, Beyond Meat's demanding reinvestments to stay relevant with consumers have drained company resources. Its free cash flow margin has been among the worst in the consumer staples sector, averaging negative 67.2%. However, its margin has averaged year-on-year increases of 59.5 percentage points over the last 12 months, showing the company is taking action to improve its situation.
Key Takeaways from Beyond Meat's Q4 Results
We were impressed by how significantly Beyond Meat blew past analysts' revenue expectations this quarter. On the other hand, its full-year revenue guidance missed analysts' expectations and its operating margin missed Wall Street's estimates. What seems to be the saving grace and reason for the stock action, though, is the company's 2024 gross margin and implied operating profit guidance. Beyond Meat is calling for gross margin in the "mid to high teens range for the full year 2024", which is much better than Wall Street's projection of roughly 7%. Additionally, the company's guidance calls for a smaller operating loss than Wall Street expected. Overall, the results were fine and the guidance is highly comforting. The stock is up 30.4% after reporting and currently trades at $9.95 per share.
So should you invest in Beyond Meat right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
