JK, I bought back the puts I had sold yesterday, so just holding my base shares.
Beyond Meat's Earnings Are Today. Investors Are Counting on Better-Than-Expected Results. -- Barrons.com
10:52 am ET August 4, 2020 (Dow Jones) Print
By Al Root
Beyond Meat's earnings are big events on Wall Street because the figures generally trigger huge volatility in the stock. Investors can expect more of the same Tuesday evening as the company talks about managing a high-growth enterprise during a global pandemic.
Here's what to watch for, along with some recent history.
-- Analysts expect the company to lose 2 cents a share from $99 million in
sales. Beyond Meat is still growing rapidly and only recently turned
profitable. Quarterly sales are expected to grow about 47% year over
year. A result that just meets analysts' estimates, however, won't be
enough for investors.
-- People have come to expect Beyond to blow past sales estimates. Beyond
has beaten forecasts for sales by double-digit percentages each of the
past four quarters.
-- A huge earnings "beat" isn't a guarantee of big stock gains, though.
Beyond has reported five quarters as a public company, beating sales
estimates each time, but the stock has risen only twice. Curiously,
investors have come to expect better-than-expected results.
-- Investors also have come to expect volatility after earnings are
released. The smallest post-earnings stock move is a decline of 12%
following the second-quarter 2019 earnings. Options markets imply a
roughly 15% move, up or down, following the coming quarterly report.
-- From time to time, the stock trades independently of how well management
is running the business. The C-suite's performance has been good. During
the quarter, the company expanded further into both Europe and China in
both the retail and food-service distribution channels. Investors will
expect to hear about additional distribution plans and how sales are
progressing in geographic markets the company has recently entered.
-- One key question for investors in the first quarter was how the shift
from restaurant sales to grocery sales would play out as people were
forced to stay at home to slow the spread of the coronavirus.
First-quarter sales grew 142% year over year, beating expectations.
-- Trends at grocery stores will continue to be a focus for investors. "We
have some visibility into the retail side of the business, wrote J.P.
Morgan analyst Ken Goldman in a Tuesday report previewing earnings. He
said April, May, and June retail growth, according to data tracker
Nielsen, came in at 126%, 104%, and 83%, respectively. Those are solid
figures.
-- Investors will want an update on July sales and how new grocery
initiatives, such as value packs with more faux meat at lower unit prices,
are being received by the consumers.
-- Ken Goldman, for his part, rates Beyond shares the equivalent of Hold and
has a $95 price target for the stock. Strong numbers and a Hold rating
illustrate why trends in the stock market and business execution don't
always sync up. The key is valuation. Beyond trades for about 12 times
estimated 2021 sales, much higher than its peers in the food industry. Of
course, Beyond grows much faster than the overall food industry.
Since Beyond reported its first-quarter 2020 numbers in May, shares are up 34%, better than the 15% and 12% respective gains of the S&P 500 and Dow Jones Industrial Average over the same span.
Year to date, Beyond stock is up about 80%.
Write to Al Root at allen.root@dowjones.com
(END) Dow Jones Newswires
