Beyond Meat, Inc. (NASDAQ: BYND), Dunkin ‘Brands Group, Inc. (NASDAQ: DNKN) – Beyond Meat is increasingly competitive as demand grows
Later that week, though Beyond Meat Inc. (NASDAQ: BYND) opens the books on fourth quarter performance, investors are likely to be watching two things closely. One is the California-based alternative protein company’s response to increasing competition. The other is how it meets the increasing demand. A just announced announcement of brand loyalty with the coffee giant Starbucks Corporation (NASDAQ: SBUX) might suggest that BYND is doing fine from a marketing perspective, but what about the supply side?
Both the increase in the number of entrants in the meatless “meat” market and the question of production capacity are due to the fact that more and more people want to consume the latest generation of meat-like products.
But at least with the first question, BYND has a lot of work to do if it wants to keep its piece of the pie. Or should we say Patty?
The grill is getting full
This Monday only, privately owned food company Cargill said it is entering the vegetable patty and ground product market in retail stores, cafeterias, fast food outlets and restaurants. BYND’s shares fell nearly 3% that day, but it was hard to say how much, if anything, of that decline was related to Cargill’s announcement because the S&P 500 index (INDEXSP: .INX) also fell around 3% during the day amid a broad coronavirus-related sell-off.
Although Cargill’s announcement was made after the fourth quarter, it might be interesting to see if BYND management will discuss this in its conference call scheduled for Thursday, February 27 after the market closes. Unless management specifically talks about Cargill, perhaps they will address BYND’s strategy of dealing with sizzling competition in general.
Cargill joins BYND and is privately owned by Impossible Foods among competitors in the plant-based meat alternatives market. Kellogg Company (NYSE: K), Hormel Foods Corp. (NYSE: HRL), Tyson Foods, Inc. (NYSE: TSN), Nestle (OTCMKTS: NSRGY) and Kroger Co (NYSE: KR) are also moving in space.
“Competitors are not a surprise or a development we are not prepared for,” said Ethan Brown, CEO of BYND, on the conference call last quarter.
Lots of plates to fill
Another topic that is likely to keep investors busy is how well BYND is keeping up with demand for its products from a variety of partners – including a new one this week. Though BYND stock slipped on Cargill news, the stock roared back on Wednesday when SBUX announced it would be adding a BYND plant-based breakfast sandwich to outlets in Canada starting next week. Recall that COO Rosalind Brewer announced on SBUX’s recent conference call that both US and Canadian stores are offering herbal products.
And then there is MCD. Last month, the burger giant announced it was expanding a test run for its plant-based burger – made with a BYND patty – from 28 to 52 Ontario restaurants Dunkin ‘Brands Group Inc (NASDAQ: DNKN) announced in October that it will launch its BYND vegetable-based breakfast sausage patty in November, earlier than originally planned.
But things didn’t go smoothly for BYND on the fast food front. Last month, International’s restaurant brands (NYSE: QSR) Tim Hortons announced the removal of BYND products from Ontario and British Columbia – after removing products from its menu in all other provinces – and told the media that “the product is not so popular with our guests was accepted as we had imagined ”. Being.”
That being said, it’s likely that the “parting ways” with QSR helped pave the way for the SBUX deal.
The meat alternative industry “is still in its infancy and is driven by the excitement for a future in which meat will be separated from animals so that consumers can enjoy meat without emerging concerns about its health or its impact on the environment or animal welfare. “Said the investment research firm CFRA in a recently published research note.
With that in mind, BYND is likely to be very busy maintaining multiple supplier relationships, and investors will likely want to hear an update on the company’s production plans.
“We will continue to invest in our infrastructure, make sure we have enough capacity to meet growing demand and run the global protein company,” Brown said, according to the transcript on the conference call.
Hot off the grill, then on the hot plate
BYND’s shares have been on a wild ride since the company’s initial public offering last year at $ 25 and began trading at $ 46 for the first time. After hitting a high of $ 240 in July, stocks fell sharply and continued their downtrend, even after the company announced its first quarterly earnings and exceeded expectations for sales and earnings last quarter.
While increased competition played a role in the downside, the sale was also tied to a lock-up period that expired in October, which allowed investors to cash in on their profits prior to going public. Previously, some investors may have sold in anticipation of the sale.
With the lockup running in the background, BYND’s shares stabilized at lower levels – which were still well above their IPO – and have risen higher since then. Shares rose again on this week’s SBUX announcement. (see Figure 1 below).
FIGURE 1: ADDITIONAL SIZZLE. Shares in Beyond meat (BYND) In the months after the company’s IPO last spring, it hissed, then fizzled out. After consolidating in the mid-1970s, stocks started heating up again in 2020. Data source: Nasdaq. Diagram source: TD Ameritrade’s thinkorswim® platform. For illustrative purposes only. Past performance does not guarantee future results.
It seems the company is leaving behind some of the hype that can come with hot IPOs and exciting new products, but investors still seem to have an appetite for what BYND is cooking up.
Yield expectations and options activity
BYND is expected to report Earnings per share of $ 0.01, At Revenue of $ 79.5 million, according to third-party consensus analyst estimates. According to the Market Maker Move ™ indicator on the thinkorswim® platform, options traders have priced in an expected price movement of around 13% in both directions around the profit publication.
Looking at the expiration date on February 28, put activity was highest on the 100 and 105 strikes. Calls have seen more activity, with volume centered on the 120 and 130 strikes.
Note: Call options represent the right, but not the obligation, to buy the underlying asset over a certain period of time at a predetermined price. Put options represent the right, but not the obligation, to sell the underlying asset over a certain period of time at a predetermined price.
Information from TDA is not intended as investment advice or as a recommendation or endorsement of any particular investment or strategy and is for illustrative purposes only. Make sure you understand all of the risks associated with any strategy.
Image by Angelo Esslinger from Pixabay