It's been a great morning session for Kraft Heinz investors, who saw their shares rise 2.0% to a price of $28.06 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.
Kraft Heinz Is Not a Value Stock:
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 25.91 and an average price to book (P/B) ratio of 3.03. In contrast, Kraft Heinz has a trailing 12 month P/E ratio of -6.3 and a P/B ratio of 0.8.
Kraft Heinz has moved -21.9% over the last year compared to 15.1% for the S&P 500 — a difference of -37.0%. Kraft Heinz has a 52 week high of $36.53 and a 52 week low of $25.44.
Wider Gross Margins Than the Industry Average of 27.06%:
| 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $24,977 | $26,185 | $26,042 | $26,485 | $26,640 | $25,846 |
| Gross Margins | 33.0% | 35.0% | 33.0% | n/a | 34.0% | 35.0% |
| Net Margins | 8% | 1% | 4% | 9% | 11% | 11% |
| Net Income (M) | $1,935 | $356 | $1,012 | $2,368 | $2,855 | $2,744 |
| Net Interest Expense (M) | $1,361 | $1,394 | $2,047 | $921 | $912 | $912 |
| Depreciation & Amort. (M) | $994 | $969 | $910 | $933 | $961 | $696 |
| Diluted Shares (M) | 1,224 | 1,228 | 1,236 | 1,235 | 1,235 | 1,215 |
| Earnings Per Share | $1.58 | $0.29 | $0.82 | $1.91 | $2.31 | $2.26 |
| EPS Growth | n/a | -81.65% | 182.76% | 132.93% | 20.94% | -2.16% |
| Avg. Price | $27.01 | $27.05 | $34.81 | $36.71 | $36.98 | $28.06 |
| P/E Ratio | 16.99 | 93.28 | 41.94 | 19.22 | 15.87 | 12.36 |
| Free Cash Flow (M) | $2,784 | $4,333 | $4,459 | $1,553 | $2,963 | $3,160 |
| CAPEX (M) | $768 | $596 | $905 | $916 | $1,013 | $1,024 |
| EV / EBITDA | 14.74 | 18.7 | 13.94 | 14.0 | 11.55 | 22.1 |
| Total Debt (M) | $29,238 | $28,300 | $21,801 | $20,064 | $20,032 | $19,869 |
| Net Debt / EBITDA | 6.63 | 8.03 | 4.2 | 4.17 | 3.37 | 7.79 |
| Current Ratio | 1.03 | 1.34 | 0.99 | 0.87 | 0.99 | 1.06 |
Kraft Heinz has slight revenue growth and increasing reinvestment in the business, wider gross margins than its peer group, and positive EPS growth. However, the firm has a highly leveraged balance sheet. Finally, we note that Kraft Heinz has positive cash flows and just enough current assets to cover current liabilities, as shown by its current ratio of 1.06.
