Take that, hardcore Beyond Meat (BYND) haters on Wall Street.
After seeing its stock plunge some 53% over the past three months amid a barrage of bearish notes from sell-side analysts — mostly on fears of growing plant-based food competition and the stock’s meaty valuation — Beyond Meat surprised many Monday by turning its first-ever quarterly profit. The company earned 6 cents a share versus a year earlier loss of $1.45 a share. Analysts expected 3 cents a share. Total sales surged 250% to $92 million, ahead of forecasts for $83 million.
“We remain focused on expanding our distribution footprint, both domestically and abroad, building our brand, introducing new innovative products into the marketplace, and bolstering our infrastructure and internal capabilities to fuel our future growth,” Beyond Meat founder and CEO Ethan Brown said in a statement.
The company raised its full-year adjusted earnings before interest, taxes and depreciation estimate to $20 million from breakeven previously. Sales are also expected to be $25 million to $35 million higher than management’s prior forecasts. It marks the second straight time Beyond Meat has raised its full-year sales and profit forecasts.
Earnings are being ignored
Somewhat oddly, Beyond Meat’s stock traded down about 7% in the after-hours on the report. The stock skidded 12% in pre-market trading on Tuesday. With a bear raid still apparently in effect on Beyond Meat’s stock — further reflecting worries about insiders selling stock amid a looming lockup expiry — it’s unfortunate its earnings are being completely ignored.
They really shouldn’t be, however.
For starters, Beyond Meat’s surprisingly profitable third quarter wasn’t due to some movement of expenses around or one-time items. It was a good old-fashioned profitable quarter because of strong revenue growth and more efficient — and expanded — distribution. Beyond Meat’s gross profit margin surged to 35.6% from 19.2% a year ago, underscoring that point. Secondarily, the quarter gives investors a tiny snapshot into how profitable the company could be as it secures more deals with restaurant chains, gains distribution space at retailers and rolls out more new products (such as chicken at fast-food restaurants, bacon and fish).
Bottom line: Beyond Meat is proving it’s a real business, with real legs. This is not a cash hemorrhaging, money-losing Uber (UBER) business model here people. Eventually, the masses on Wall Street will return to that viewpoint — provided Beyond Meat keeps on tossing profitable quarters up on the board.