Kraft Heinz shares fell by -1.6% during the day's afternoon session, and are now trading at a price of $31.8. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.
Kraft Heinz Is Potentially Undervalued and Trades Below Its Graham Number:
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. The company belongs to the Consumer Staples sector, which has an average price to earnings (P/E) ratio of 24.36 and an average price to book (P/B) ratio of 4.29. In contrast, Kraft Heinz has a trailing 12 month P/E ratio of 12.4 and a P/B ratio of 0.78.
Kraft Heinz's PEG ratio is 2.15, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
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 |
