Is Beyond Meat's Stock Overvalued Or Undervalued?

Beyond Meat Inc BYND shares have lagged the S&P 500 in 2021, generating a year-to-date total return loss of 35.7%.

Beyondm Meat's stock has had a wild ride in 2021, but investors may be wondering whether there’s any value to be found in Beyond shares.

Earnings: A price-to-earnings ratio (PE) is one of the most basic fundamental metrics for gauging a stock’s value. The lower the PE, the higher the value.

For comparison, the S&P 500’s PE is currently at about 29.4, nearly double its long-term average of 15.9. Beyond doesn’t currently have a PE ratio because the company is not profitable. In the most recent quarter, Beyond reported a $54.8 million net loss.

Related Link: Why Beyond Meat Shares Are Falling

Growth: Looking ahead to the next four quarters, the S&P 500’s forward PE ratio looks much more reasonable at just 21.6. Unfortunately, analysts are not expecting Beyond to turn a profit over the next four quarters.

The current consensus earnings per share estimate for Beyond for 2022 is a per-share loss of 66 cents. Beyond Meat’s consumer staples sector peers are currently averaging a 20.7 forward earnings multiple.

Yet when it comes to evaluating a stock, earnings aren't everything.

The growth rate is also critical for companies that are rapidly building their bottom lines. The price-to-earnings-to-growth ratio (PEG) is a good way to incorporate growth rates into the evaluation process. The S&P 500’s overall PEG is about 0.9. Once again, without positive earnings, Beyond doesn’t have a positive PEG ratio to use as a valuation gauge.

Price-to-sales ratio is another important valuation metric, particularly for unprofitable companies and growth stocks. The S&P 500’s PS ratio is 3.19, well above its long-term average of 1.62. Beyond Meat’s PS ratio is 13.5, more than four times the S&P 500 average. However, Beyond's PS ratio is also down 35.8% over the past two years, suggesting the stock is priced at the low end of its historical valuation range.

Finally, Wall Street analysts see little value in Beyond stock over the next 12 months. The average analyst price target among the 13 analysts covering Beyond is $80, suggesting about 0.6% downside from current levels.

The Verdict: At today's price, Beyond stock appears to be overvalued based on a sampling of common fundamental valuation metrics.