A strong performer from today's afternoon trading session is Kraft Heinz, whose shares rose 1.5% to $36.24 per share. For those of you thinking about investing in the stock, here is a brief value analysis of the stock using the company's basic fundamental ratios.
The Market May Be Undervaluing Kraft Heinz's Assets and Equity:
The Kraft Heinz Company, together with its subsidiaries, manufactures and markets food and beverage products in North America and internationally. The company belongs to the Consumer Staples sector, which has an average price to earnings (P/E) ratio of 21.21 and an average price to book (P/B) ratio of 4.12. In contrast, Kraft Heinz has a trailing 12 month P/E ratio of 15.8 and a P/B ratio of 0.89.
Kraft Heinz's PEG ratio is 2.9, 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.
Wider Gross Margins Than the Industry Average of 24.63%:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $26,268 | $24,977 | $26,185 | $26,042 | $26,485 | $26,640 |
| Gross Margins | 34.0% | 33.0% | 35.0% | 33.0% | n/a | 34.0% |
| Net Margins | -39% | 8% | 1% | 4% | 9% | 11% |
| Net Income (M) | -$10,192 | $1,935 | $356 | $1,012 | $2,368 | $2,855 |
| Net Interest Expense (M) | $1,284 | $1,361 | $1,394 | $2,047 | $921 | $912 |
| Depreciation & Amort. (M) | $983 | $994 | $969 | $910 | $933 | $961 |
| Diluted Shares (M) | 1,219 | 1,224 | 1,228 | 1,236 | 1,235 | 1,235 |
| Earnings Per Share | -$8.36 | $1.58 | $0.29 | $0.82 | $1.91 | $2.31 |
| EPS Growth | n/a | 118.9% | -81.65% | 182.76% | 132.93% | 20.94% |
| Avg. Price | $47.57 | $27.01 | $27.05 | $34.81 | $36.71 | $36.24 |
| P/E Ratio | -5.69 | 16.99 | 93.28 | 41.94 | 19.22 | 15.55 |
| Free Cash Flow (M) | $1,748 | $2,784 | $4,333 | $4,459 | $1,553 | $2,963 |
| CAPEX (M) | $826 | $768 | $596 | $905 | $916 | $1,013 |
| EV / EBITDA | -9.54 | 14.74 | 18.7 | 13.94 | 14.0 | 11.39 |
| Total Debt (M) | $31,147 | $29,238 | $28,300 | $21,801 | $20,064 | $20,032 |
| Net Debt / EBITDA | -3.25 | 6.63 | 8.03 | 4.2 | 4.17 | 3.37 |
| Current Ratio | 1.21 | 1.03 | 1.34 | 0.99 | 0.87 | 0.99 |
Kraft Heinz has generally positive cash flows and slight revenue growth and increasing reinvestment in the business. Additionally, the company's financial statements display wider gross margins than its peer group and positive EPS growth. However, the firm has not enough current assets to cover current liabilities because its current ratio is 0.99. Finally, we note that Kraft Heinz has significant leverage levels.
