AMDP Proposal

February 28, 2023

TO: Professor Clark Hansen, CEO, AMDP

FROM: Allison Kim

SUBJECT: Investment opportunity—Sweet Green & Beyond Meat

 

Summary:

 

In search for investment opportunities that satisfy AMDP standards, I have found a company that is popularly known for being environmentally friendly: Beyond Meat. Beyond Meat is a food processing company that produces plant-based protein options. They provide food without compromising nutritional or environmental benefits. Beyond Meat seems to meet AMDP’s standards, but after further review, I am recommending withholding investment until further notice.

 

AMDP Standards:

As a reminder, these are the standards I used to identify investments that AMDP would approve of:

 

-       Triple Bottom Line (TBL)

The Triple Bottom Line measures a company based off three variables:

o   Prosperity: It measures the financial and sustainable growth of a business without damaging others.

§  Example: Expected profits; research and development.

o   People: It regulates that all the business’ processes are respectful and beneficial to every stakeholder that a business affects directly and indirectly.

§  Example: Advancing human rights; community engagement; safe work environment.

o   Planet: It calculates how the business affects the environmental health and global issues.

§  Example: Recycle programs; low carbon footprint.

o   https://sustain.wisconsin.edu/sustainability/triple-bottom-line/#:~:text=Triple%20bottom%20line%20theory%20expands,people%2C%20planet%2C%20and%20prosperity.

 

-       Corporate Social Responsibility (CSR)

CSR is a business’ responsibility to meet the needs of its stakeholders and the stakeholders’ responsibilities to hold the business socially accountable. Through practice, the business is aware of its effects on society like its economic, social, and environmental impacts.

o   Stakeholders include: customers, employees, investors, environment, communities, businesses.

o   https://www.investopedia.com/terms/c/corp-social-responsibility.asp

 

-       Social Enterprise:

A social enterprise is any business that yields financial and social returns. While it earns a profit, it simultaneously benefits the surrounding community.

o   https://learning.candid.org/resources/knowledge-base/social-enterprise/

 

-       Carbon Footprint

 It measures the amount of carbon that is emitted by a business’ activities. It can include carbon emissions or the biocapacity needed to take care of untreated carbon waste. The carbon footprint measures the environmental impact of a business starting from acquisition of supplies to the disposal of the product.

o   https://www.footprintnetwork.org/our-work/climate-change/

 

Beyond Meat:

Background:

 

Accordance to AMDP’s standards:

 

Beyond Meat has an ESG rating of 1.9 out of 5 as of March 2022 from FTSE Russell’s ESG company and they have consistently received a “severe” rating from Sustainalytics. They have ranked lower than the traditionally known “polluters” like Exxon Mobil and Ford Motors. While this is shocking news, the low rankings come from biases. {source} Beyond Meat does not contribute to as much environmental damage as other companies it is rated lower than. But, they are held to a higher standard due to lack of research. Additionally, there is uncertainty with the information about its supply chain management. Once there is more research done and the alternative food industry has been more developed, Beyond Meat has the capacity of excelling in the food processing industry because it was a plant-based meat pioneer and has the first-mover advantage; it has a strong brand name and captured most of the target market.

 

 

Financial analysis:

Income Statement valuation:

Beyond Meat was severely impacted by COVID-19 which is reflected on its income statements. (2021-2019) For example, COVID-19 slowed sales and increased supply chain shortages. As a result, the 2021 income from operations was a loss of $174,933,000. This is a 255% decrease from the 2020 income from operations. However, this loss is due to the high investments Beyond Meat is making to restructure its business. So, once there are more sales, based on the economics of scale, Beyond Meat will be very profitable.

 

Share price valuation:

The share price has been consistently declining in value and is currently valued at $16.89. Also, there has not been any dividend payments in the history of Beyond Meat.

 

Recommendation:

Beyond Meat is a volatile company that heavily depends on consumer trends to be profitable. I would not invest right now because Beyond Meat is restructuring its business model and strategy in response to COVID-19. So, they will likely not generate a positive income soon.

 

But, I would invest in the future. I believe that societal trends will favor alternative-meat products because of the environmental benefits once the industry develops. Also, in 2021, Beyond Meat has invested almost 3 times more into research and development. This will make them satisfy AMDP’s standards more because the production processes and supply chain will be optimized and require less energy and resources.

 

 

 

 

Takeaways:

 

 

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