Now trading at a price of $37.75, Kraft Heinz has moved 0.4% so far today.
Kraft Heinz returned losses of -5.2% last year, with its stock price reaching a high of $42.2 and a low of $30.68. Over the same period, the stock underperformed the S&P 500 index by -26.5%. As of April 2023, the company's 50-day average price was $35.73. 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 4.3% dividend yield over the last 12 months.
The Business Has Weak Operating Margins:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $26,268 | $24,977 | $26,185 | $26,042 | $26,485 | $27,161 |
| Revenue Growth | n/a | -4.91% | 4.84% | -0.55% | 1.7% | 2.55% |
| Net Margins | -39% | 8% | 1% | 4% | 9% | 11% |
| Net Income (MM) | -$10,192 | $1,935 | $356 | $1,012 | $2,363 | $2,988 |
| Net Interest Expense (MM) | $1,284 | $1,361 | $1,394 | $2,047 | $921 | $900 |
| Depreciation & Amort. (MM) | $983 | $994 | $969 | $910 | $933 | $958 |
| Earnings Per Share | -$8.36 | $1.58 | $0.29 | $0.82 | $1.91 | $2.42 |
| EPS Growth | n/a | 118.9% | -81.65% | 182.76% | 132.93% | 26.7% |
| Diluted Shares (MM) | 1,219 | 1,224 | 1,228 | 1,236 | 1,235 | 1,235 |
| Free Cash Flow (MM) | $1,748 | $2,784 | $4,333 | $4,459 | $1,553 | $2,509 |
| Capital Expenditures (MM) | $826 | $768 | $596 | $905 | $916 | $1,063 |
| Current Ratio | 1.21 | 1.03 | 1.34 | 0.99 | 0.87 | 1.0 |
| Total Debt (MM) | $31,147 | $29,238 | $28,300 | $21,801 | $20,064 | $19,270 |
| Net Debt / EBITDA | -3.25 | 6.63 | 8.03 | 4.2 | 4.17 | 3.34 |
Kraft Heinz's financial statements include several red flags such as weak operating margins with a positive growth rate, positive cash flows, and not enough current assets to cover current liabilities. Additionally, the firm has a highly leveraged balance sheet. On the other hand, the company benefits from weak revenue growth and increasing reinvestment in the business and positive EPS growth.
Kraft Heinz Is Potentially Undervalued and Trades Below Its Graham Number:
Kraft Heinz has a trailing twelve month P/E ratio of 14.8, compared to an average of 21.21 for the Consumer Staples sector. Based on its EPS guidance of $3.03, the company has a forward P/E ratio of 11.8. The 4.5% compound average growth rate of Kraft Heinz's historical and projected earnings per share yields a PEG ratio of 3.27. This suggests that these shares are overvalued. In contrast, the market is likely undervaluing Kraft Heinz in terms of its equity because its P/B ratio is 0.94 while the sector average is 4.12. The company's shares are currently trading -19.0% below their Graham number.
Kraft Heinz Has an Average Rating of Buy:
The 20 analysts following Kraft Heinz have set target prices ranging from $29.0 to $44.0 per share, for an average of $38.55 with a buy rating. As of April 2023, the company is trading -7.3% away from its average target price, indicating that there is an analyst consensus of some upside potential.
Kraft Heinz has an average amount of shares sold short because 2.8% of the company's shares are sold short. Institutions own 88.7% 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 $12,292,714,379.
