Kraft Heinz Co. (NASDAQ: $KHC) stands as a global leader in the food and beverage industry, renowned for manufacturing and marketing a diverse array of household brands, among them Kraft, Heinz, Oscar Mayer, and Planters. The company’s headquarters are located in Chicago, Illinois, and its operations span more than 40 countries.
Kraft Heinz Co. is classified as a consumer staples stock due to its provision of essential items, independent of the prevailing economic conditions. This categorization further designates it as a defensive stock, characterized by its track record of consistent dividends and stable share prices.
Kraft Heinz boasts a rich history of producing high-quality, cost-effective food products. Its product portfolio encompasses a wide variety of offerings, including condiments, cheese, and a range of meals and snacks. Among its most popular products are household favorites like Kraft Macaroni and Cheese, Heinz Ketchup, Oscar Mayer Hot Dogs, and Planters Peanuts.
The year 2015 marked a pivotal moment in Kraft Heinz’s history when Kraft Foods Group and H.J. Heinz Company merged to establish Kraft Heinz. This union brought together two of the world’s most iconic food brands.
In 2017, the company expanded its reach by acquiring the UK-based food company Big Food Group, known for producing an assortment of products, including sauces, soups, and condiments. In 2018, Kraft Heinz added Primal Kitchen to its portfolio, a brand specializing in organic and paleo-friendly food products like dressings, marinades, and protein bars.
That same year, the company also acquired the food and instant coffee business of Cerebos Australia, a subsidiary of Japan’s Suntory Holdings. In October 2020, Kraft Heinz extended its global presence by acquiring Assan Foods, a Turkish-based company recognized for its production of sauces, tomato paste, and other food products. November 2020 witnessed the acquisition of Primal Nutrition LLC, a manufacturer of collagen powder and bars.
Despite its strong brand recognition and diverse product range, Kraft Heinz has encountered significant challenges in recent years. One of its foremost hurdles has been adapting to shifting consumer preferences. The evolving demand for healthier, organic, and natural food products has led to a decline in sales for some of Kraft Heinz’s core offerings.
To address these challenges, Kraft Heinz has prioritized innovation and product development. The company has introduced new products, including its organic Capri Sun juices line, and snacks fortified with vitamins and minerals.
Additionally, Kraft Heinz has committed to enhancing the quality of its existing products by removing artificial colors, flavors, and preservatives from items like macaroni and cheese.
$KHC Metrics Analysis
KHC currently boasts a trailing twelve-month price-to-earnings (PE) ratio of 12.17, aligning closely with the historical average of approximately 15. This indicates that KHC is presently trading at a value that mirrors investor sentiment, as they are paying a price in line with the stock’s earnings potential. KHC’s trailing twelve-month earnings per share (EPS) of 1.49 justifiably supports its current market price.
It’s important to note that trailing PE ratios do not factor in a company’s projected growth rate. Consequently, some companies may exhibit high PE ratios due to robust growth prospects, even if their past earnings have been relatively low.
In the case of KHC, the 12-month forward price-to-earnings to Growth (PEG) ratio stands at 2.33. This suggests that the market is currently overvaluing KHC relative to its expected growth, as the PEG ratio surpasses the fair market value benchmark of 1.
The PEG ratio of 1.49 is derived from dividing the forward price-to-earnings ratio by the growth rate. PEG ratios are a widely used valuation metric due to their incorporation of multiple fundamental company metrics and their focus on the company’s future prospects rather than its past performance.
Kraft Heinz (KHC) Dips More Than Broader Markets
Last month, Kraft Heinz (KHC) closed the most recent trading day at $33.09, moving -1.72% from the previous trading session. This move lagged the S&P 500’s daily loss of 0.16%. At the same time, the Dow lost 0.48%, and the tech-heavy Nasdaq gained 0.11%.
Heading into today, shares of the maker of Oscar Mayer meats, Jell-O pudding, and Velveeta cheese had lost 7.3% over the past month, lagging the Consumer Staples sector’s loss of 3.29% and the S&P 500’s loss of 1.25% in that time.
Wall Street will be looking for positivity from Kraft Heinz as it approaches its next earnings report date. In that report, analysts expect Kraft Heinz to post earnings of $0.66 per share. This would mark year-over-year growth of 4.76%. The most recent consensus estimate is calling for quarterly revenue of $6.71 billion, up 3.14% from the year-ago period.
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