Plant-based meats producer Beyond Meat (NASDAQ: BYND) stock has been taking a beating since peaking at its $221 pandemic highs and tanking harder than the indices’ sell-off. Rising labor costs and inflation have cut into the thin margins as COVID surges continue to plaque its operations. The global supply chain disruption and growing logistics costs are also strong headwinds that have hit both top and bottom lines. The Company’s negative top-line growth in fiscal Q4 2021 shook investors as a growth stock needs positive growth to keep its valuation. However, the Company believes the growth will return in 2022 after the temporary downturn in the quarter. As COVID-related disruptions alleviate, consumers are expected to return to healthy foods from splurging on comfort foods. Beyond Meat’s foodservice business is expected to see a quicker recovery as restaurants resume full operations. The Company firmly believes its investments in the EU and China will payoff in fiscal 2022. Prudent investors seeking exposure to the plant-based food trend can look for opportunistic pullbacks in shares of Beyond Meat.
Q4 Fiscal 2021 Earnings Release
On Feb. 24, 2021, Beyond Meat released its fiscal fourth-quarter 2021 results for the quarter ending December 2021. The Company reported an earnings-per-share (EPS) loss of (-$1.27) excluding non-recurring items versus consensus analyst estimates for a loss of (-$0.68), a (-$1.27) miss. Revenues fell 1.2% year-over-year (YoY) to $100.07 million falling short of analyst estimates of $101.92 million. Gross profit margins were 14.1% of net revenues. Beyond Meat CEO Ethan Brown commented, “ "In 2021 we saw strong growth in our international channel net revenues, as well as sporadic yet promising signs of a resumption of growth in U.S. foodservice channel net revenues as COVID-19 variants peaked and declined. These gains, however, were dampened by what we believe to be a temporary disruption in U.S. retail growth, for our brand and the broader category… "As we begin 2022, we are pleased with the progress we are making against our long-term strategy, such as the number of tests and core menu placements recently announced by our global QSR partners. Though we will continue to invest during 2022, we expect to substantially moderate the growth of our operating expenses as we leverage the building blocks we now have in place to serve our customers, consumers, and markets — bringing forward our exciting and expansive future one delicious serving at a time."
The Company issued in-line guidance for fiscal full-year 2022 revenues between $560 million to $620 million versus $611.37 consensus analyst estimates. The effects of COVID-19 continue to plague the recovery in addition to rising labor costs and inflation.
Conference Call Takeaways
CEO Brown reviewed the challenges that had an impact on its business operations. He noted that since it went public in 2018, the business grew 328% on a three-year CAGR of 74%. While the revenues grew 37% in 2020, it saw a (-1.4%) pullback in fiscal Q4 2021. He stated his belief that the reduced growth rate in 2021 was ab aberration and temporary. He noted that his conviction comes from four general factors. They don’t expect specific consumer trends that were popular during COVID to continue. For example, consumers diminished focus on health-oriented eating choices, instead of settling for comfort food with a reduced preference to try new foods. The Company was ready to launch its largest in-store sampling program, only to have them scuttled due to the Delta variant surge. The Company expects to resume the program in 1H 2022. Secondly, the Company has a large portfolio of new products that hit the market and/or expand (EG: Beyond the Orange Chicken at Panda Express). Third the relieving of the pandemic means its foodservice business should see improvement as COVID disruptions dissipate. Lastly, the Company has been investing in the EU and China markets which should yield sizable retail and foodservice opportunities in those geographies.
BYND Opportunistic Pullback Levels
Using the rifle charts on weekly and daily charts can provide a near-term perspective of the playing field for BYND stock. The weekly rifle chart peaked on its last coil attempt near the $53.61 Fibonacci (fib) level. The weekly inverse pup breakdown has a falling 5-period moving average (MA) resistance at $39.97 followed by the weekly 15-period MA at $46.79. The weekly stochastic fell back under the 20-band and weekly lower Bollinger Bands (BBs) sit at $24.00. The weekly market structure low (MSL) buy triggers above the $41.95 level. The daily rifle chart has a breakout attempt as the 5-period MA slopes up at $39.02 attempting to cross the 15-period MA at $39.30. The daily 50-period MA resistance sits at $43.95. The daily upper BBs sits at $47.40. The daily stochastic is stalling at the 30-band, ready to either form a mini pup higher triggering a breakout, or cross back down to trigger an inverse pup breakdown on the daily chart. Prudent investors can watch for opportunistic pullback levels at the $35.41 fib, $33.06 fib, $29.50, $27.17 fib, $25.44, $22.54 fib, $20.54, and the $17.00 fib level. Upside trajectories range from the $53.61 fib up to the $67.68 fib level.
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