Image by Sean Hayes from Pixabay

Given all the hype regarding plant-based foods you would think that there would be many pure-play companies in the sector but that is simply not the case. Only 3 companies in the sector are still pure-play and have market caps in excess of $100M. We track their stock performances in the munKNEE Plant-based Food Stocks Index along with whether or not they have Net Positive Operating Cash Flows; recent growth in their Net Operating Cash Flows; their Altman -Z Scores; their Piotroski F-Scores; and the percentage probability each company has of going bankrupt within the next 2 years (definitions at end of article). [Keep in mind that what makes big percentage gains possible is the huge percentage losses over the past five years, with these companies down between 71% and 91% from initial optimism.]

None of the 3 largest plant-based food stocks have a Positive Net Operating Cash Flow and are ranked below as to their likelihood of Financial Distress within the next 2 years according to data from  macroaxis.com as well as their stock performances year-to-date (February 24th), as follows:

1. Tattooed Chef (TTCF): UP 9.7% YTD
   • Offers a broad portfolio of plant-based food products that are available in the frozen food sections of national retail food stores across the United States.
     • Chance of Financial Distress within 2 years: 26%
     • Z-Score: 44.4
     • Piotroski F-Score: 3.0
     • Read: Tattooed Chef: Insolvency Risk And Speculative Growth
2. Oatly Group (OTLY): UP 22.4% YTD
   • The world’s largest oat drink company catering primarily to customers in Sweden, Germany, the United Kingdom, Netherlands, Finland, and North America.
     • Chance of Financial Distress within 2 years: 30%
     • Z-Score: 4.8
     • Piotroski F-Score: 4.0
     • Read: Oatly stock is defended at BofA with liquidity on the mend
3. Beyond Meat (BYND): UP 53.6% YTD
   • Seeks to replicate the look, cook, and taste of meat. Its products are sold in the meat case of retail food stores across the U.S. and Canada and 83 other countries.
     • Chance of Financial Distress within 2 years: 46% 
     • Z-Score: 0.0
     • Piotroski F-Score: 2.0
     • Read: Beyond Meat soars after targeting cash flow positive operations in back half of the year

In total, the munKNEE Plant-Based Food Stocks Index is UP 47.2% YTD.

Below are the definitions for Positive Net Operating Cash Flow, the Altman Z-Score, and the Piotroski F-Score:

• Positive Net Operating Cash Flow:
  •  is money coming in through sales minus operating expenses and a company doesn’t survive without it, as such, it is the best measure of a company’s financial and operational health.
• The Altman Z-Score:
  • is a numerical measurement used to predict the chances of a business going bankrupt in the next two years compared to a company in a similar line of business and has an accuracy that ranges from 82% and 94%.
    • companies with Z-Scores above 3.1 are generally considered to be stable and healthy with a low probability of bankruptcy,
    • scores that fall between 1.8 and 3.1 lie in a so-called ‘grey area’ and
    • scores of less than 1 indicate a high probability of distress.
• The Piotroski F-Score:
  • is a popular financial indicator that puts together nine criteria to evaluate the financial strength of a company based on its profitability, leverage, liquidity, source of funds, and operating efficiency.
    • scores of 8 and 9 are usually classified as strong-value stocks and
    • scores of 2 or below are considered weak value stocks.

More By This Author:

ZYNE: Nano-Cap Company That Is Focused On Treatments For Neuropsychiatric Disorders
"Rags-To-Riches" Portfolio Underperforming YTD
"Multi-Bagger" Portfolio Outperforming "Rags-To-Riches" Portfolio YTD By A 2-To-1 Margin