Yum Brands, McDonald’s Deals Lift Beyond Meat Stock Despite Earnings
By Teresa Rivas
Feb. 26, 2021 10:23 am ET
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Beyond Meat's retail sales were up 76.3% from a year earlier.
Angela Weiss / AFP via Getty Images
Beyond Meat announced two key partnerships along with mixed fourth-quarter results, sending shares of the plant-based-protein company higher..
Beyond Meat (BYND) said late Thursday it lost $25.1 million, or 40 cents per share. On an adjusted basis, which excludes expenses related to the Covid-19 pandemic, it lost 34 cents per share. Revenue rose 3.5% to $101.9 million. Analysts were looking for a 14 cent per-share loss and revenue of $103.6 million.
The company said that the Covid crisis continues to weigh on its food service channel because fewer people are dining at restaurants. Revenue at that segment was down 42.6%. In addition, a surge in supermarket sales the company enjoyed earlier in the pandemic, as consumers stocked up on groceries, has “moderated,” it said. Still, retail sales were up 76.3% from a year earlier.
Citing uncertainty related to the pandemic, the company declined to provide a full-year forecast.
Separately, Beyond Meat said it had signed a three-year agreement with McDonald’s (MCD) to be the fast-food giant’s “preferred supplier” for the McPlant patty. In addition, the companies “will explore co-developing other plant-based menu items — like plant-based options for chicken, pork and egg — as part of McDonald’s broader McPlant platform,” it said.
The move is a break from tradition for McDonald’s, which in the past hasn’t publicly stated which food suppliers it uses—in many cases because its large size means it needs more than one to satisfy demand. That is likely why Beyond Meat will be the preferred supplier for McPlant patties, rather than the only one.
Beyond Meat stock initially fell when McDonald’s announced the McPlant because it wasn’t identified as a supplier.
The company also announced another deal with Yum Brands (YUM) to create plant-based protein items at its KFC, Pizza Hut, and Taco Bell brands “over the next several years.”
This is the latest in the in a long string of agreements between the two companies. Taco Bell announced a partnership earlier this year, while Pizza Hut did so in November. Beyond Meat expanded in China with a partnership with KFC in 2020.
Beyond Meat was up 7.4% to $154.39 in early trading. The shares have gained 60% in the past 12 months and are up 15% year to date.
While the worse-than-expected result in terms of sales and earnings may worry some investors, the fourth-quarter figures are an improvement from the numbers it disclosed in November, which fell far short of expectations in terms of sales. High-profile distribution agreements have tended to boost Beyond Meat in the past, although some might wonder if part of Friday’s pop is also due to high short interest in the stock.
Write to Teresa Rivas at teresa.rivas@barrons.com
