First, we had a growing interest in healthy eating, including plant-based burger alternatives. Add to that a meat shortage, thanks to the novel coronavirus. The result is a perfect storm of opportunity for Beyond Meat (NASDAQ:BYND). BYND stock has more than doubled since bottoming in March.
You’ve surely heard that the coronavirus pandemic is causing huge problems in meat processing plants across the country. The Centers for Disease Control and Prevention says that nearly 5,000 meat and poultry processing workers have reported coronavirus cases at 170 plants across the country.
One of the worst was the now-infamous Smithfield pork processing plant in Sioux Falls, S.D. which is responsible for about 5% of U.S. pork products, More than 640 cases were reported amid the company’s 3,700 workers, making it at one point the No. 1 hot spot for Covid-19 in the country.
It’s in this backdrop that companies like Beyond Foods and privately owned Impossible Foods are getting more attention. After all, these companies boomed in 2019 (doesn’t that feel like a long time ago?) as interest in plant-based alternatives increased.
A recent Nielson report says demand for plant-based meat alternatives increased 278% from a year ago. Impossible Foods just announced demand for its Impossible Burger “skyrocketed” and it cut a deal to sell the patties at 1,700 Kroger (NYSE:KR) grocery stores in the U.S.
The Impossible Whopper is also sold across the country at Restaurant Brands International’s (NYSE:QSR) chain of Burger King stores, giving plant-based foods another highly visible national footprint.
Beyond Meat, meanwhile, has a new deal with Starbucks (NASDAQ:SBUX) to sell its products in the coffee chain’s stores. A JPMorgan analyst also says that he believes McDonald’s (NYSE:MCD) will ink a deal with BYND to sell a plant-based burger of its own.
McDonald’s successfully completed a test of a plant-based BYND sandwich at its Ontario, Canada restaurants.
Let’s take a closer look at BYND stock, which recently reported first-quarter earnings.
BYND Stock at a Glance
BYND surprised investors in a good way with its quarterly earnings. Net income was $1.8 million, or $0.3 per share, while Wall Street had expected a loss of $0.6 per share.
A year ago, BYND had a quarterly loss of $6.6 million, or $0.95 per share, so turning a profit so quickly was a huge accomplishment and raised a lot of eyebrows.
Year-to-date, BYND stock is up a robust 76%, and while it’s still a long way away from all-time highs hit a year ago, Beyond Meat is undoubtably on an upward trend. The company says it’s growing a rate of 248% compared to 2019. Retail says of Beyond Meat products were up 190% year-over-year.
In a statement, CFO and treasurer Mark Nelson said he’s confident in the company’s long-term future:
“We are pleased with the Company’s first quarter results even as we began to navigate headwinds stemming from the COVID-19 pandemic late in the quarter. We maintained our solid top-line momentum while driving our best-ever performance in production unit cost per pound. Despite near-term challenges ahead stemming from the ongoing global health crisis, our improving operating results and continued strength of our balance sheet give us added confidence about the Company’s long-term financial position.”
In April, BYND announced the opening of a new $150 million five-year revolving credit facility that includes an accordion feature for up to another $200 million. That facility will be used to help fund future growth, which will be important as Beyond Meat continues to increase its footprint.
The Bottom Line on BYND Stock
Beyond Meat is undoubtedly the No. 1 name in plant-based burger alternatives, but it’s going to have to work to keep its position. Impossible Foods continues to raise money and while there’s no IPO scheduled, taking the company public would put more pressure on BYND.
Meanwhile, companies like Tyson Foods (NYSE:TSN), Kellogg (NYSE:K), Kroger and Conagra Brands (NYSE:CAG) are started their own plant-based food brands.
Partnerships with Starbucks and McDonald’s could give Beyond Meat more visibility. Beyond Meat envisions a day when customers routinely get a plant-based sausage sandwich with their morning coffee or a meatless version of a Big Mac for lunch. That day may not be too far off.
Patrick Sanders is a freelance writer and editor in Maryland, and from 2015 to 2019 was head of the investment advice section at U.S. News & World Report. Follow him on Twitter at @1patricksanders. As of this writing, he did not hold a position in any of the aforementioned securities.
