The vegan food market is expected to hit $31.4 billion by 2026, registering a 10.5% CAGR. Increased obesity rates throughout the world, and rising concerns over heart disease, diabetes, asthma, and others have increased consumer health consciousness. Furthermore, approximately 65% of the world’s population suffers from lactose intolerance, which is a major factor driving demand for dairy alternatives.
Moreover, growing public awareness about animal health and abuse in the food sector has prompted many consumers to switch from animal-based to plant-based foods. However, due to persistent supply chain woes currently, such companies' revenue and sales growth has been negatively impacted.
So, we believe investors are better off avoiding fundamentally weak vegan stocks Oatly Group AB (OTLY) and Beyond Meat Inc. (BYND), whose shares have slumped in price over the past few months and could retreat further based on their poor growth attributes.
Oatly Group AB (OTLY)
OTLY in Malmö, Sweden, is an oatmilk company that offers a variety of plant-based dairy products made from oats. It sells Barista edition oatmilk, oatgurts, and frozen sweets and novelties, as well as ready-to-drink beverages and cookery goods.
In November 2021, the Schall Law Firm, a national shareholder rights litigation firm, commenced investigating allegations of securities law breaches on behalf of OTLY investors. The inquiry focuses on whether the company made false or misleading statements to investors and failed to disclose relevant information. The investigation could impact the company's price performance in the near term.
OTLY's revenue increased 49.2% year-over-year to $171.06 million in the third quarter, ended Sept. 30, 2021. However, its operating loss grew 464% from its year-ago value to $44.46 million. The company's net loss surged 295.8% from the prior-year quarter to $41.19 million, while its loss per share increased 250% year-over-year to $0.07 over this period.
The company's EPS is expected to remain negative in its fiscal 2021. The stock has declined 51% in price over the past three months and 12.4% over the past month.
OTLY's POWR ratings are consistent with this bleak outlook. The stock has an overall F rating, which translates to a Strong Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
OTLY has been graded a D for Value, Stability, and Growth. Within the B-rated Beverages industry, it is ranked #34 of 35 stocks. To see additional POWR Ratings for Sentiment, Quality, and Momentum for OTLY, click here.
Beyond Meat Inc. (BYND)
BYND in El Segundo, Calif., manufactures, markets, and sells plant-based meat products in the United States and internationally. The company offers its products through supermarkets, mass merchandisers, clubs, convenience stores, natural retailers, restaurants, foodservice outlets, school channels, and e-commerce sites.
For the third quarter, ended Oct. 02, 2021, BYND's operating expenses increased 12.7% year-over-year to $106.43 million. Its operating loss grew 192.6% from its year-ago value to $53.99 million. The company's net loss was up 184.2% from the prior-year quarter to $54.82 million, while its loss per share came in at $0.87.
BYND's EPS is estimated to decline 268.3% in its fiscal 2021 and at a 17.1% CAGR over the next five years. The stock has declined 53.6% in price over the past year and 40.5% over the past three months.
BYND's weak fundamentals are reflected in its POWR ratings. The stock has an overall F rating, which equates to a Strong Sell in our POWR Ratings system. The stock has an F grade for Sentiment, Growth, and Value. In the B-rated, 84-stock Food Makers industry, BYND is ranked last.
In addition to the POWR Ratings grades I have just highlighted, one can see the BYND rating for Stability, Momentum, and Quality here.
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OSH shares were unchanged in premarket trading Wednesday. Year-to-date, OSH has declined -39.23%, versus a -3.41% rise in the benchmark S&P 500 index during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.
2 Vegan Stocks to Avoid Like the Plague StockNews.com
