Rocketing to a price of $27.95 during today's afternoon trading session, shares of Kraft Heinz are still -7.71% below their average target price of $30.29. Could there be more upside potential for the stock? Analysts are giving KHC an average rating of hold and target prices ranging from $27.0 to $51.0 dollars per share.
Kraft Heinz's short interest can give us an idea of what future price movements the market expects from the stock. The short interest is the percentage of shares that are tied up in short positions, which will provide gains to the investor only if the stock price falls. The stock's short interest is 6.0% which seems to indicate a mixed sentiment on KHC
Short selling involves borrowing shares and then selling them at current market prices. In the successful version of the strategy, the shares are purchased at a lower price at some time in the future. The investor then returns the shares to the lender, and keeps the profit made on the sell/buy transaction.
One way to get an idea of the market sentiment on a stock is to check its rate of institutional ownership. In the case of Kraft Heinz, institutional investors own 59.3% of the shares. This would indicate a positive sentiment towards the stock among institutions. What does this really tell us?
Institutional investors such as hedge funds, investment firms, and wealth managers devote significant resources to identifying good investments. If they have decided to invest in KHC, it probably means they believe it is a solid investment choice. But it could also mean they are buying up shares in an effort to acquire the company or get seats on the board of directors. Also bear in mind that institutions are fallible (just maybe not quite as fallible as the average retail investor), so they may simply be wrong when they think they've found a good stock.
Overall, there is mixed market sentiment on Kraft Heinz because its an analyst consensus of some upside potential, a hold rating, an average amount of shares sold short, and an average number of institutional investors. Warren Buffett famously said that in the short term, markets are voting mechanisms, but in the long term, they are weighing mechanisms. This means that long term investors should be aware of a stock's fundamentals before committing.
Buffett was one of the fist investors to focus on free cash flow as a yardstick for a company's health. Here are KHC's recent cash flows:
| Date Reported | Cash Flow from Operations ($ k) | Capital expenditures ($ k) | Free Cash Flow ($ k) | YoY Growth (%) |
|---|---|---|---|---|
| 2024 | 4,184,000 | 1,024,000 | 3,160,000 | 6.65 |
| 2023 | 3,976,000 | 1,013,000 | 2,963,000 | 90.79 |
| 2022 | 2,469,000 | 916,000 | 1,553,000 | -65.17 |
| 2021 | 5,364,000 | 905,000 | 4,459,000 | 2.91 |
| 2020 | 4,929,000 | 596,000 | 4,333,000 | 55.64 |
| 2019 | 3,552,000 | 768,000 | 2,784,000 |
