KHC

Don't Judge Kraft Heinz on Technicals Alone - Check Its Fundamentals!

Kraft Heinz logged a 0.4% change during today's afternoon session, and is now trading at a price of $33.62 per share.

Kraft Heinz returned losses of -11.0% last year, with its stock price reaching a high of $42.8 and a low of $32.73. Over the same period, the stock underperformed the S&P 500 index by -17.0%. As of April 2023, the company's 50-day average price was $35.45. The Kraft Heinz Company, together with its subsidiaries, manufactures and markets food and beverage products in the United States, Canada, the United Kingdom, and internationally. Based in Pittsburgh, PA, the large-cap Consumer Staples company has 37,000 full time employees. Kraft Heinz has offered a 4.8% dividend yield over the last 12 months.

Exceptional Profitability Overshadowed by Excessive Leverage:

2018-02-16 2019-06-07 2020-02-14 2021-02-17 2022-02-17 2023-02-16
Revenue (MM) $26,076 $26,268 $24,977 $26,185 $26,042 $26,485
Gross Margins 35.0% 34.0% 33.0% 35.0% 33.0% 31.0%
Operating Margins 23% 22% 20% 21% 20% 17%
Net Margins 42.0% -39.0% 8.0% 1.0% 4.0% 9.0%
Net Income (MM) $10,941 -$10,192 $1,935 $356 $1,012 $2,363
Net Interest Expense (MM) -$1,234 -$1,284 -$1,361 -$1,394 -$2,047 -$921
Depreciation & Amort. (MM) -$1,031 -$983 -$994 -$969 -$910 -$933
Earnings Per Share $8.91 -$8.36 $1.58 $0.29 $0.82 $1.91
EPS Growth n/a -193.83% 118.9% -81.65% 182.76% 132.93%
Diluted Shares (MM) 1,228 1,219 1,224 1,228 1,236 1,236
Free Cash Flow (MM) $1,695 $3,400 $4,320 $5,525 $6,269 $3,385
Capital Expenditures (MM) -$1,194 -$826 -$768 -$596 -$905 -$916
Net Current Assets (MM) -$46,815 -$42,608 -$41,604 -$38,765 -$34,948 -$33,746
Long Term Debt (MM) $28,308 $30,770 $28,216 $28,070 $21,061 $19,233
Net Debt / EBITDA 4.19 4.47 4.52 3.83 3.06 3.47

Kraft Heinz Is Potentially Undervalued and Trades Below Its Graham Number:

Kraft Heinz has a trailing twelve month P/E ratio of 13.8, compared to an average of 24.36 for the Consumer Staples sector. Based on its EPS guidance of $2.98, the company has a forward P/E ratio of 11.9. The company doesn't issue forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is -18.8%. On this basis, the company's PEG ratio is -0.74, which indicates that its shares are overpriced. In contrast, the market is likely undervaluing Kraft Heinz in terms of its equity because its P/B ratio is 0.83 while the sector average is 4.29. The company's shares are currently trading -18.4% below their Graham number.

Analysts Give Kraft Heinz an Average Rating of Hold:

The 19 analysts following Kraft Heinz have set target prices ranging from $31.0 to $48.0 per share, for an average of $41.1 with a hold rating. As of April 2023, the company is trading -13.7% away from its average target price, indicating that there is an analyst consensus of some upside potential.

Kraft Heinz has a very low short interest because 1.5% of the company's shares are sold short. Institutions own 83.4% of the company's shares, and the insider ownership rate stands at 1.39%, suggesting a large amount of insider shareholders. The largest shareholder is Berkshire Hathaway, Inc, whose 27% stake in the company is worth $10,947,842,233.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.

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