Consumers are changing their spending habits in the face of prolonged price growth. I think fundamentally weak stocks Beyond Meat, Inc. (BYND), Tattooed Chef Inc. (TTCF), and AppHarvest, Inc. (APPH) are best to avoided now for the reasons discussed throughout this article.
The Consumer Price Index (CPI) increased by 0.6% from January 2023 and February 2023 and by 6% from February 2022. From January 2023 to February 2023, the CPI for total food climbed by 0.4%, and food prices were 9.5% higher than in February 2022.
Food inflation was 10.2% at home and 8.4% away from home in the 12 months ending February 2023. Although the rate of inflation away from home is lower than at home, foodservice expenses are more than four times higher than at-home eating occasions, with the absolute dollar disparity widening.
According to a recent poll of American households receiving food stamps performed by financial software company Propel, about a third were skipping meals, eating less, or relying on food banks as food prices skyrocketed. Moreover, people are eating out at restaurants less often as inflation remains uncomfortably high, and recession fears are widespread.
Beyond Meat, Inc. (BYND)
BYND develops, manufactures, markets, and sells plant-based meat products in the United States and internationally. The company’s product offerings include Beyond Burger, Beyond Sausage, Beyond Beef, Beyond Meatballs, Beyond Breakfast Sausage Patties, Beyond Breakfast Sausage Links, Beyond Beef Crumbles, and Beyond Italian Sausage Crumbles.
Its forward EV/Sales multiple of 4.81 is 182.3% higher than the 1.70 industry average. In terms of its forward Price/Sales, BYND is trading at 2.53x, which is 127.7% higher than the industry average of 1.11x.
BYND’s trailing-12-month gross profit margin of negative 5.67% is lower than the 31.37% industry average. Its trailing-12-month negative net income margin of 87.40% is lower than the 3.68% industry average.
BYND’s net revenues declined 20.6% year-over-year to $79.94 million for the fourth quarter that ended December 31, 2022. The company’s current assets came in at $606.46 million for the period that ended December 31, 2022, compared to $1.05 billion for the period that ended December 31, 2021.
Also, its total assets came in at $1.06 billion, compared to $1.38 billion for the same period the prior year.
Street expects BYND’s revenue to fall 7.2% year-over-year to $388.67 million in 2023. Its EPS is expected to remain negative at $3.53 in 2023. It has missed EPS estimates in three of four trailing quarters. The stock has lost 64.8% over the past year to close the last trading session at $15.33.
BYND’s POWR Ratings reflect its bleak outlook. The stock has an overall F rating, which equates to a Strong Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
BYND also has an F grade for Stability, Sentiment, and Quality and a D for Value. The stock is ranked #80 out of 82 stocks in the Food Makers industry. BYND ratings for Growth and Momentum can be accessed here.
Tattooed Chef Inc. (TTCF)
TTCF is a plant-based food company which produces and sells a portfolio of frozen foods. It supplies plant-based products to retailers in the United States.
TTCF’s trailing-12-month negative ROCE, and ROTA of 53.71% and 40.26% are lower than the industry averages of 10.59% and 4.17%, respectively.
During the fiscal third quarter that ended November 30, 2022, TTCF’s revenue decreased 6.7% year-over-year to $54.12 million. Its adjusted EBITDA declined 395.8% year-over-year to negative $25.50 million. Also, the company’s net loss increased 368.7% year-over-year to $38.50 million, while the loss per share came in at $0.46, up 360% year-over-year.
TTCF’s revenue is expected to decrease 6.8% year-over-year to $67.14 million for the quarter ended March 31, 2022. Its EPS is expected to decline 19% year-over-year to negative $0.25 for the same quarter. It has failed to surpass the EPS estimates in each of the trailing four quarters.
The stock has declined 86.8% over the past year to close the last trading session at $1.49.
TTCF has an overall F rating, equating to a Strong Sell in our POWR Ratings system.
It has an F grade for Stability and Quality and D for Growth and Sentiment. It is ranked #81 in the same industry. We have also rated TTCF for Value and Momentum. Get all the TTCF ratings here.
AppHarvest, Inc. (APPH)
APPH is an applied agricultural technology company that develops and operates indoor farms with robotics and artificial intelligence to build climate-resilient food system.
APPH’s forward EV/Sales multiple of 7.13 is 318.3% higher than the 1.70 industry average. In terms of its forward Price/Sales, APPH is trading at 1.80x, which is 61.6% higher than the industry average of 1.11x.
APPH’s trailing-12-month negative ROCE and ROTA of 54.53% and 29.67% are lower than the industry averages of 10.59% and 4.17%, respectively.
APPH’s gross loss increased 113% year-over-year to $18.90 million for the fourth quarter ended December 31, 2022. Its net loss increased 5.6% year-over-year to $93.32 million. The company’s current assets came in at $114.11 million for the period that ended December 31, 2022, compared to $188.45 million for the period that ended December 31, 2021.
Analysts expect APPH’s EPS to come in negative $0.75 in 2023. Over the past year, the stock has lost 89.7% to close the last trading session at $0.52.
APPH’s has an overall F rating, equating to a Strong Sell in our proprietary rating system.
In addition, the stock has an F grade for Value, Momentum, Stability, and Quality and a D for Sentiment. It is ranked last in the same industry. To access APPH’s Growth grades, click here.
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BYND shares were trading at $14.87 per share on Monday afternoon, down $0.46 (-3.00%). Year-to-date, BYND has gained 20.80%, versus a 7.15% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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