Plant-Based Food Stocks Correlate Loosely With Their Stock Performances

Image by Sean Hayes from Pixabay

Today's article looks at the constituents in the munKNEE Pure-Play Plant-Based Food Stocks Index as to:

  • how stable each company is financially based on its Altman-Z Scores (see definition below) and its corresponding percentage chance of encountering financial stress - even going bankrupt - within the next 2 years,
  • whether, or not, each company has a positive operational cash flow (see definition below),
  • the extent to which each company is
    • growing its operating cash flow margin.
    • growing its earnings before interest, taxes, depreciation, and amortization (EBITDA),
    • reducing its debt interest, and
    • growing its net income margin and
  • how its respective financial health correlates to its stock performance

and presents its findings below in descending order of each company's chance of experiencing financial distress in the next 2 years with their stock performances relative to their prices as of October 14th and those that show the odd improvement are highlighted in bold:

  1. Else Nutrition (BABYF): Stock Performance since the beginning of October (-13.5%); since the end of August (-6.3%); and YTD (-33.7%)
    • Positive net operational cash flow: no
    • Net operational cash flow growth: increased
    • Chance of experiencing financial distress in the next 2 years: 25%
    • EBITDA margin growth: declined
    • Interest expense growth: Not Applicable, and
    • Net income margin growth: declined.
  2. Guru Organic (GUROF): Stock Performance since the beginning of October (No Change); since the end of August (-14.9%); and YTD (-66.3%)
    • Positive net operational cash flow: no
    • Net operational cash flow growth: decreased
    • Chance of experiencing financial distress in the next 2 years: 26%
    • EBITDA margin growth: declined
    • Interest expense growth: increased, and
    • Net income margin growth: declined.
  3. Tattooed Chef (TTCF): Stock Performance since the beginning of October (-10.0%); since the end of August (-27.3%); and YTD (-71.2%)
    • Positive net operational cash flow: no
    • Net operational cash flow growth: increased
    • Chance of experiencing financial distress in the next 2 years: 27%
    • EBITDA margin growth: declined
    • Interest expense growth: increased, and
    • Net income margin growth: declined.
  4. Oatly Group (OTLY): Stock Performance since the beginning of October (-14.4%); since the end of August (-25.7%); and YTD (-71.7%)
    • Positive net operational cash flow: no
    • Net operational cash flow growth: decreased
    • Chance of experiencing financial distress in the next 2 years: 39%
    • EBITDA margin growth: declined
    • Interest expense growth: Not Applicable, and
    • Net income margin growth: declined.
  5. Beyond Meat (BYND): Stock Performance since the beginning of October (-5.8%); since the end of August (-43.0%); and YTD (-79.5%)
    • Positive net operational cash flow: no
    • Net operational cash flow growth: declined
    • Chance of experiencing financial distress in the next 2 years: 87%
    • EBITDA margin growth: declined
    • Interest expense growth: increased, and
    • Net income margin growth: declined.


Conclusion

The above analyses reveal that NONE of the constituents have a positive net operational cash flow which is essential for a company to survive but there is some correlation between the constituent stock price performances and their current financial health.

The munKNEE Pure-Play Plant-Based Food Stocks Index, as a whole, has declined 6.2% since the beginning of October; -34.9% since the end of August; and -75.7% YTD.

Hopefully, today's article has shed some light on what is actually happening in the sector and will prove helpful to you in determining whether or not to buy one of the above stocks and, if so, which one(s), but please do your own due diligence and avail yourself of a wide array of further analyses and commentary here before doing so.

If you have any questions regarding the above article or comments to make on the topic you are encouraged to do so in the Comment section below.


More By This Author:

Canadian Cannabis LPs: A Financial Health Vs. Stock Performance Comparison
Cannabis MSOs: Correlation Between Their Financial Health And Stock Performance?
Only One Cannabis MSO Is Financially Stable And With Financially Efficient Operations

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Comments

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Samantha Carter 1 year ago Member's comment

Asking for a friend who is vegetarian - Which one of these shares would you prefer and why?

Weed Investor 1 year ago Member's comment

Good explanation.