The three-year earnings decline has likely contributed toBeyond Meat's (NASDAQ:BYND) shareholders losses of 88% over that period
While not a mind-blowing move, it is good to see that the Beyond Meat, Inc. (NASDAQ:BYND) share price has gained 15% in the last three months. But only the myopic could ignore the astounding decline over three years. Indeed, the share price is down a whopping 88% in the last three years. So it sure is nice to see a bit of an improvement. But the more important question is whether the underlying business can justify a higher price still. We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.
Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.
Check out our latest analysis for Beyond Meat
Beyond Meat isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Over three years, Beyond Meat grew revenue at 16% per year. That's a pretty good rate of top-line growth. So it's hard to believe the share price decline of 23% per year is due to the revenue. It could be that the losses were much larger than expected. If you buy into companies that lose money then you always risk losing money yourself. Just don't lose the lesson.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
Beyond Meat is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. If you are thinking of buying or selling Beyond Meat stock, you should check out this free report showing analyst consensus estimates for future profits.
A Different Perspective
Beyond Meat shareholders are down 76% for the year, falling short of the market return. Meanwhile, the broader market slid about 13%, likely weighing on the stock. Shareholders have lost 23% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. It's always interesting to track share price performance over the longer term. But to understand Beyond Meat better, we need to consider many other factors. Even so, be aware that Beyond Meat is showing 5 warning signs in our investment analysis , and 1 of those can't be ignored...
But note: Beyond Meat may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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