Three Things to Look In Beyond Meat's Q3 Earnings Report Beyond Meat is not expected to show a profit. However, investors want to know if declining revenue is a transitory issue or the sign of increased competition and declining consumer...

Profit will remain elusive, but the larger question is consumer acceptance

Normally the first items I would look at in an earnings report are the top line and bottom line results. And I'm not saying that investors should ignore those numbers when Beyond Meat (NASDAQ:BYND) reports after the market closes on November 10.

However, I'll be much more interested in the guidance. The plant-based meat company lowered its third-quarter guidance in its last earnings report. Then it did so again just about two weeks ago. Not surprisingly, the analyst community expressed their displeasure as have investors. BYND stock is down 10% since closing at $108.32 on October 21.

I'll also be looking at the company's take on consumer acceptance of its product as the price of ground beef remains high. And finally, I'll be looking for positive news regarding consumer acceptance of the McPlant Burger, the byproduct of the company's partnership with McDonald's (NYSE:MCD).

What Will Earnings Say?

At this point, analysts are predicting the company to deliver negative earnings per share (EPS) of 36 cents. In the last week, the company forecast its revenue to come in at approximately $106 million. That was a downward adjustment from the guidance of between $120 and $140 million the company had forecast on the prior earnings call.

The company has posted sequential revenue growth in the last three quarters. And the $149.43 million it posted in the last quarter was, by far, the largest number the company has posted.

While investors may be able to overlook one bad quarter of revenue, a larger issue is that Beyond Meat hasn't posted positive earnings in any of those quarters. And that story is likely to repeat itself in the third quarter.

Simply put, the company is continuing to lose money even as it is increasing sales. Bullish analysts will point out that this is the price of growth. They will note that Beyond Meat has doubled its spending on research and development. And of all the companies vying for supremacy in the plant-based meat space, Beyond Meat is well positioned (and perhaps best positioned) to achieve the economy of scale that will be required.

However, that's only going to be true if consumers not only choose plant-based meat, but specifically choose the Beyond brand. And there's no evidence that is occurring.

If Not Now, When?

This is my biggest question in regards to Beyond Meat. One of the narratives for plant-based meat was that, as the price of ground beef rose, plant-based meat (which was trading at a premium) would now look like an inexpensive alternative. And there was a chance that it might have more availability.

But if the company's revenue numbers are any indication, it seems that consumer demand is going in the opposite direction. This could mean that Beyond Meat is losing shelf space to competitors. And that makes It difficult to promote a bullish narrative.

Will the McPlant Take Root?

The answer to this question will likely be it's too early to tell. However, I'll want to hear what management says regarding the initial launch of the McPlant burger at select U.S. locations. This can potentially be an opportunity if the McPlant burger is rolled out nationally.

However, investors have seen this story before with Beyond Meat. The company has partnerships with other restaurant chains such as Dunkin' and Starbucks (NASDAQ:SBUX). However, the company's products are no longer part of Dunkin's national menu. And the company also saw Tim Horton's cancel the company's products in 2020.

I'm more than willing to chalk that up to winning some and losing some. However, it does raise the question of whether the McPlant will get the national attention the company needs.

BYND Stock is a Hold

There are some who would say that BYND stock looks oversold and therefore presents a buying opportunity. They may be right. The relative strength indicator sits at around 38 at the time of this writing. However, many other technical indicators are suggesting the stock may have further to fall. And investors also shouldn't ignore the amount of short interest on the stock. This remains uncomfortably high for risk-averse investors.

If Beyond Meat can manage to leap over its lowered expectations, there may be a profitable trade. But I'll need to see more than one quarter before I suggest BYND stock is a buy. Right now, I side with the analysts in saying that the stock is a solid hold.