After determining suboptimal consumer demand for the McPlant burger using a patty supplied by Beyond Meat, the QSR chain has withdrawn the product from the stores where it was under test. It is understood that the product has gained acceptance in Europe. McDonald’s CEO Chris Kempczinski noted “after a successful pilot in the U.K. beginning in January, we made it available across all the restaurants in the U.K. and Ireland.” He added, “When customers are ready for McPlant we will be ready for them.”
The announcement that McDonald’s sales in the U.S. have terminated resulted in an immediate six percent decline in the share price of Beyond Meat (BYND). BYND is down 52 percent YTD declining to a market capitalization of slightly over $2,000 million. Despite trials and the experience of McDonald’s, neither YUM! brands nor Pizza Hut have committed to national menu offerings.
BYND has traded over a range of $20.50 to $134.99 over the past 52 weeks with a 50-day moving average of $27.83. The company has generated negative returns on assets of -10.5 percent and -167 percent on equity. Over the trailing 12-month period the company has posted a negative operating margin of -50 percent and a profit margin of -55 percent. With a forward P/E exceeding 600, the share is over-priced given an apparent inability to gain traction in the U.S. among QSRs and with slow to declining retail sales. This is due in part to competition and higher price relative to real ground beef.
Analysts have expressed concern over the free cash flow ogenerated by BYND. The financials released yesterday confirm the precarious situation for the Company. Details will be evaluated and a report will be posted on CHICK-NEWS