Today we're going to take a closer look at Large-Cap Consumer Staples company Kraft Heinz, whose shares are currently trading at $30.64. We've been asking ourselves whether the company is under or over valued at today's prices... let's perform a brief value analysis to find out!
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 23.09 and an average price to book (P/B) ratio of 3.3. In contrast, Kraft Heinz has a trailing 12 month P/E ratio of 27.6 and a P/B ratio of 0.77.
Kraft Heinz has moved -20.4% over the last year compared to 24.5% for the S&P 500 — a difference of -44.9%. Kraft Heinz has a 52 week high of $38.96 and a 52 week low of $30.01.
Wider Gross Margins Than the Industry Average of 25.77%:
| 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 | $30.73 |
| P/E Ratio | -5.69 | 16.99 | 93.28 | 41.94 | 19.22 | 13.19 |
| 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 | 10.17 |
| 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.
