Beyond Meat (BYND)

Plant-based protein company Beyond Meat (NASDAQ:BYND) fell short of the market’s revenue expectations in Q1 CY2025, with sales falling 9.1% year on year to $68.73 million. Its non-GAAP loss of $0.67 per share was 41.3% below analysts’ consensus estimates.

Company Overview

A pioneer at the forefront of the plant-based protein revolution, Beyond Meat (NASDAQ:BYND) is a food company specializing in alternatives to traditional meat products.

The perishable food industry is diverse, encompassing large-scale producers and distributors to specialty and artisanal brands. These companies sell produce, dairy products, meats, and baked goods and have become integral to serving modern American consumers who prioritize freshness, quality, and nutritional value. Investing in perishable food stocks presents both opportunities and challenges. While the perishable nature of products can introduce risks related to supply chain management and shelf life, it also creates a constant demand driven by the necessity for fresh food. Companies that can efficiently manage inventory, distribution, and quality control are well-positioned to thrive in this competitive market. Navigating the perishable food industry requires adherence to strict food safety standards, regulations, and labeling requirements.

Competitors include private company Impossible Foods and public companies Conagra (NYSE:CAG), which owns Gardein, and Kellanova (NYSE:K), which owns MorningStar Farms, and Maple Leaf Foods (TSX:MFI).

A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years.

With $319.6 million in revenue over the past 12 months, Beyond Meat is a small consumer staples company, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with retailers.

As you can see below, Beyond Meat’s demand was weak over the last three years. Its sales fell by 11.8% annually as consumers bought less of its products.

This quarter, Beyond Meat missed Wall Street’s estimates and reported a rather uninspiring 9.1% year-on-year revenue decline, generating $68.73 million of revenue.

Looking ahead, sell-side analysts expect revenue to grow 1.8% over the next 12 months. While this projection suggests its newer products will spur better top-line performance, it is still below the sector average.

Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there’s a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive.

Beyond Meat’s average quarterly sales volumes have shrunk by 9.7% over the last two years. This decrease isn’t ideal because the quantity demanded for consumer staples products is typically stable.

In Beyond Meat’s Q1 2025, sales volumes dropped 11.2% year on year. This result represents a further deceleration from its historical levels, showing the business is struggling to move its products.

Beyond Meat has bad unit economics for a consumer staples company, signaling it operates in a competitive market and lacks pricing power because its products can be substituted. As you can see below, it averaged a 3.6% gross margin over the last two years. Said differently, for every $100 in revenue, a chunky $96.43 went towards paying for raw materials, production of goods, transportation, and distribution.

Beyond Meat’s gross profit margin was negative 1.5% this quarter. On a wider time horizon, however, Beyond Meat’s full-year margin has been trending up over the past 12 months, increasing by 15.8 percentage points. If this move continues, it could suggest an environment where the company has better pricing power and stable or shrinking input costs (such as raw materials).

Unprofitable public companies are rare in the defensive consumer staples industry. Unfortunately, Beyond Meat was one of them over the last two years as its high expenses contributed to an average operating margin of negative 76.8%.

On the plus side, Beyond Meat’s operating margin rose by 53.6 percentage points over the last year. Still, it will take much more for the company to reach long-term profitability.

Beyond Meat’s operating margin was negative 81.8% this quarter. The company's consistent lack of profits raise a flag.

Revenue trends explain a company’s historical growth, but the change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Although Beyond Meat’s full-year earnings are still negative, it reduced its losses and improved its EPS by 17.2% annually over the last three years. The next few quarters will be critical for assessing its long-term profitability.

In Q1, Beyond Meat reported EPS at negative $0.67, up from negative $0.72 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates. Over the next 12 months, Wall Street expects Beyond Meat to improve its earnings losses. Analysts forecast its full-year EPS of negative $2.26 will advance to negative $1.50.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Beyond Meat’s demanding reinvestments have drained its resources over the last two years, putting it in a pinch and limiting its ability to return capital to investors. Its free cash flow margin averaged negative 32.7%, meaning it lit $32.70 of cash on fire for every $100 in revenue.

Taking a step back, we can see that Beyond Meat’s margin dropped by 1.8 percentage points over the last year. Almost any movement in the wrong direction is undesirable because it is already burning cash. If the trend continues, it could signal it’s becoming a more capital-intensive business.

Beyond Meat burned through $30.63 million of cash in Q1, equivalent to a negative 44.6% margin. The company’s cash burn was similar to its $33 million of lost cash in the same quarter last year.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Beyond Meat’s five-year average ROIC was negative 50.4%, meaning management lost money while trying to expand the business. Its returns were among the worst in the consumer staples sector.

As long-term investors, the risk we care about most is the permanent loss of capital, which can happen when a company goes bankrupt or raises money from a disadvantaged position. This is separate from short-term stock price volatility, something we are much less bothered by.

Beyond Meat burned through $107.5 million of cash over the last year, and its $1.22 billion of debt exceeds the $102.1 million of cash on its balance sheet. This is a deal breaker for us because indebted loss-making companies spell trouble.

Unless the Beyond Meat’s fundamentals change quickly, it might find itself in a position where it must raise capital from investors to continue operating. Whether that would be favorable is unclear because dilution is a headwind for shareholder returns.

We remain cautious of Beyond Meat until it generates consistent free cash flow or any of its announced financing plans materialize on its balance sheet.

We struggled to find many positives in these results as its revenue, EPS, and EBITDA fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 5.5% to $2.41 immediately after reporting.

Updated: June 14, 2025 at 10:33 PM EDT

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Beyond Meat.

We see the value of companies helping consumers, but in the case of Beyond Meat, we’re out. To kick things off, its revenue has declined over the last three years. And while its expanding operating margin shows the business has become more efficient, the downside is its brand caters to a niche market. On top of that, its relatively low ROIC suggests management has struggled to find compelling investment opportunities.

Beyond Meat’s forward price-to-sales ratio is 0.8x. The market typically values companies like Beyond Meat based on their anticipated profits for the next 12 months, but it expects the business to lose money. We also think the upside isn’t great compared to the potential downside here - there are more exciting stocks to buy.

Wall Street analysts have a consensus one-year price target of $2.75 on the company (compared to the current share price of $3.16), implying they don’t see much short-term potential in Beyond Meat.