The fast-paced inflation has left food manufacturers scrambling to find ways to cut costs and boost profits. The jump in the food index put the 12-month increase to 10.9%, the fastest pace since May 1979.
Moreover, retailers and consumer packaged goods companies are getting squeezed by higher fuel, materials, and labor costs. The Biden administration has blamed big meat and oil companies for inflation.
On top of it, the war between Russia and Ukraine has jeopardized the global food system. The war has exaggerated the crisis in the food system, which was already struggling with higher costs of living, climate change, and high fertilizer costs.
Therefore, we think the fundamentally weak food stocks Beyond Meat, Inc. (BYND) and Utz Brands, Inc. (UTZ) might be best avoided now.
Beyond Meat, Inc. (BYND)
BYND manufactures, markets, and sells plant-based meat products internationally. The company offers a range of plant-based meat products across the beef, pork, and poultry platforms.
In the second fiscal quarter ended July 2, BYND’s net revenues were $147.04 million, indicating a decline of 1.6% year-over-year. Its adjusted EBITDA decreased 2,998% from its prior-year quarter to a negative $68.78 million, while its adjusted net loss rose 394.3% from the same period last year to $97.13 million. The company’s adjusted net loss per common share came in at $1.53, rising 393.5% from the prior-year quarter.
Analysts expect BYND’s EPS to decline 29.6% year-over-year to a negative $1.13 for the fiscal quarter ending September 2022. The consensus revenue is estimated to be $115.65 million for the same period.
The stock has declined 70.6% over the past year and 45.2% year-to-date to close its last trading session at $ 35.70.
This bleak outlook is reflected in BYND’s POWR Ratings. The stock has an overall F rating, which equates to a Strong Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
BYND is graded an F in Growth, Value, Stability, Sentiment, and Quality. It is ranked #84 out of the 85 stocks in the Food Makers industry.
In addition to the POWR Rating grades we’ve stated above, one can see BYND’s rating for Momentum here.
Utz Brands, Inc. (UTZ)
UTZ operates as a snack food manufacturing company. The company’s offerings include a diverse range of salty snacks, including potato chips, kettle chips, tortilla chips, pretzels, cheese snacks, etc.
For the second fiscal quarter ended July 3, UTZ’s adjusted selling, distribution, and administrative expenses increased 15.9% year-over-year to $83.80 million, and its adjusted net income declined 3.2% from the prior-year quarter to $18.40 million. The company’s adjusted earnings per share came in at $0.13.
The consensus EPS estimate for the third quarter (ending September 2022) of $0.14 indicates a 25% year-over-year decrease. The consensus revenue is estimated to be $341.55 million for the same period.
The stock has declined 5.3% over the past year and 1.4% over the past five days to close its last trading session at $17.78.
The POWR Ratings reflect UTZ’s bleak prospects. It has an overall D rating, equating to Sell in our POWR Ratings system.
UTZ has a Sentiment and Quality grade of D. It is ranked #78 in the Food Makers industry. Click here to see additional POWR Ratings for UTZ (Growth, Value, Momentum, and Stability).
BYND shares were trading at $35.98 per share on Tuesday afternoon, up $0.28 (+0.78%). Year-to-date, BYND has declined -44.78%, versus a -9.01% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
2 Food Stocks That’ll Leave Bad Tastes in Your Mouth StockNews.com
