Beyond Meat (NASDAQ:BYND) stock will likely move higher over the next year as the foodservice segment of its total sales recovers. This is the inevitable conclusion from the plant-based meat company’s recent Q1 earnings release on May 6. As a result, I estimate that BYND stock is worth at least 50% higher at $224.13 over today’s closing price (June 11) of $149.42.

Beyond Meat’s revenue in Q1 actually was 11.4% higher than last year at $108.2 million. However, looking closer, most of the growth was from its retail segment (selling in stores), which was up 27.8%. The foodservice segment (restaurants, etc.) showed negative growth of -26% year-over-year. My thesis is that as that portion of the company’s revenue turns around, the stock will start to rise.

Valuing Beyond Meat Stock

Using that as a premise, let’s look at the numbers. First of all, the company provided its first guidance in over a year. It said that sales next quarter will rise as follows:

“Net revenues in the range of $135 million to $150 million, an increase of 19% to 32% compared to the second quarter of 2020.”

This implies that the run-rate revenue will grow to as much as $600 million (i.e., $150 million x 4). This is up 43.9% from the $417 million in sales last year, which barely rose over 2019’s $406 million in sales.

Analysts now tend to agree with this assessment of return to growth. For example, Seeking Alpha indicates that analysts’ sales estimates this year will reach $566 million and $859 million in 2022. That is over twice the $417 million in sales from 2020.

Moreover, by 2023, analysts forecast sales will hit $1.22 billion. However, to use that to value BYND stock today we must bring it back to the present value using a discount factor for the time value of money. This is because 2.5 years in the future is too far ahead to estimate sales without taking into account the alternative use of money that could be tied up until then.

For example, using a 10% discount rate, the present value factor is 78.8%. That means that the $1.22 billion in 2023 sales are worth $961 million in today’s dollars. We can use this to value BYND stock today. Here is how.

Beyond Meat has a price-to-sales (P/S) ratio of 17 (i.e., $9.63 billion / $566 million sales this year). Using a 15 times P/S multiple (to be conservative), Beyond Meat has a value of $14.415 billion. This is calculated by multiplying $961 million by 15 times.

What to Do With BYND Stock

Therefore, the discounted 2023 market value is 50% higher than today’s value (i.e., $14.415 billion / $9.63 billion). This means BYND stock is worth $224.13 per share (i.e., 1.5 x today’s price of $149.42).

That is a significantly higher value than today’s price. It depends on the company’s sales to continue to rebound, as analysts’ estimates imply. This especially applies to the foodservice segment of its total sales. All segments have to show huge growth for this price target to make sense.

However, not all analysts agree with my assessment. For example, TipRanks reports that the average Wall Street price target from 13 analysts is just $122.64, or 17% below today’s price. In addition, Seeking Alpha reports that 20 analysts have an average target of $116.20, 22% lower than today.

Therefore, in this situation, where analysts are on one side and I am on the other side (they think it will fall, I think it will rise), I use a probability model.

Probability Estimates and Expected Return

For example, let’s assume that there is a 40% chance that analysts are right and the BYND stock will fall 20%. Let’s also assume there is a just a 30% chance I am right and the stock will right 50%. Lastly, the remaining probability scenario (i.e., 100% less 40% and 30%) is 30%. To be conservative, let’s say that the stock muddles through with a market-based return of just 10%.

Therefore, the total expected return (ER) is still a positive 10% gain. Here is how we can see this. The first scenario has an ER of -8% (i.e., 40% x -20%). The second scenario (mine) has an ER of 15% (i.e., 30% x 50%). The third scenario has a 3% ER (i.e., 30% x 10%). So the total sum of all ER’s is -8% +15% +3%, or +10%.

In other words, assuming the most likely of all situations, we should still make 10% on BYND stock, in a sort of worst-case analysis. Nevertheless, I believe that the stock is still worth 50% more at $224.13.

On the date of publication, Mark R. Hake did not hold a position in any security mentioned in the article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.