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Category: Stock Market and Kraft Heinz
Date: 4 November 2019 Stock Price: $33.34 We take a look at the 3rd quarter earnings report of their 2019 fiscal year of Kraft Heinz, one of the world's largest food and beverages companies with net sales in 2018 topping $26 billion
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About Kraft Heinz
For 150 years, we have produced some of the world's most beloved products at The Kraft Heinz Company (NASDAQ: KHC). Our Vision is To Be the Best Food Company, Growing a Better World. We are one of the largest global food and beverage companies, with 2018 net sales of approximately $26 billion. Our portfolio is a diverse mix of iconic and emerging brands. As the guardians of these brands and the creators of innovative new products, we are dedicated to the sustainable health of our people and our planet.
Kraft Heinz office. Image obtained from Foodbusinessnews.net
Financial overview of Kraft Heinz 3rd quarter 2019 earnings results
The data below refers to the latest quarter's data (unless specified otherwise)
Sales per region for Kraft Heinz for the 9 months of their 2019 fiscal year (in $ billions)
- Net sales: $6.076 billion (down from $6.383 billion for the same quarter of the previous year)
- Net sales decreased by -4.8% over the last 12 months
- Cost of products sold: $4.129 billion (down from $4.289 billion for the same quarter of the previous year)
- Cost of products sold decreased by -3.7% over the last 12 months
- Net income: $899 million (up from $619 million for the same quarter of the previous year)
- Diluted earnings per share: $0.74 (up from $0.50 for the same quarter of the previous year)
- PE ratio of Kraft Heinz: 11.2
- Number of shares in issue: 1.223 billion (down from 1.226 billion for the same quarter of the previous year)
- Cash and cash equivalents: $2.315 billion
- Cash and cash equivalents per share: $1.89
- Cash and cash equivalents makes up 5.7% of Kraft Heinz's market capital
- Cash and cash equivalents makes up 2.3% of Kraft Heinz's total assets
- Inventories: $3.158 billion
- Inventories makes up 3.1% of Kraft Heinz's total assets
Sales per region for Kraft Heinz for the 9 months of their 2019 fiscal year (in $ billions)
- United States: $13.074
- Canada: $1.425
- EMEA:$1.862
- Rest of World: $2.080
Kraft Heinz (NASDAQ: KHC) management commentary on 3rd quarter 2019 earnings
PITTSBURGH & CHICAGO--(BUSINESS WIRE)--Oct. 31, 2019-- The Kraft Heinz Company (Nasdaq: KHC) (“Kraft Heinz” or the “Company”) today reported third quarter 2019 financial results that reflected a one-time gain on the sale of the Company's Canadian natural cheese business, lower net sales, and higher input costs.
“While our third-quarter results remain below our potential, we showed sequential improvement versus the first half, and I believe we are beginning to operate the business better,” said Kraft Heinz CEO Miguel Patricio. "We are making good progress in identifying and addressing the root causes of past performance, as well as setting our strategic direction. Although there is still much work ahead, we’re encouraged by our improving performance, and are even more confident in our ability to turn around the Company and set a path of long term growth and profitability.
“While our third-quarter results remain below our potential, we showed sequential improvement versus the first half, and I believe we are beginning to operate the business better,” said Kraft Heinz CEO Miguel Patricio. "We are making good progress in identifying and addressing the root causes of past performance, as well as setting our strategic direction. Although there is still much work ahead, we’re encouraged by our improving performance, and are even more confident in our ability to turn around the Company and set a path of long term growth and profitability.
Net sales were $6.1 billion, down 4.8 percent versus the year-ago period, including a negative 2.0 percentage point impact from divestitures and an unfavorable 1.7 percentage point impact from currency. Organic Net Sales(1) decreased 1.1 percent versus the year-ago period. Pricing increased 1.0 percent versus the prior year period, reflecting higher pricing in the United States, Rest of World and EMEA segments that more than offset lower pricing in Canada. Volume/mix was 2.1 percentage points below the prior year period as global growth in condiments and sauces was more than offset by lower shipments in the United States.
Net income attributable to common shareholders increased to $899 million and diluted EPS increased to $0.74, primarily reflecting the gain on the sale of Canadian natural cheese business and a non-cash impairment charge in the prior year period that was partially offset by debt extinguishment costs associated with the tender offers. Adjusted EBITDA decreased 7.8 percent versus the year-ago period to $1.5 billion, including 3.2 percentage point impact from unfavorable currency and a negative 1.4 percentage point impact from divestitures. Excluding these factors, the decrease was driven by declines in the United States and Canada, as well as higher general corporate expenses that more than offset growth in EMEA. Adjusted EPS decreased 9.2% percent to $0.69, reflecting lower Adjusted EBITDA, higher taxes on adjusted earnings in the current period, and lower interest expense versus the year-ago period.
Net income attributable to common shareholders increased to $899 million and diluted EPS increased to $0.74, primarily reflecting the gain on the sale of Canadian natural cheese business and a non-cash impairment charge in the prior year period that was partially offset by debt extinguishment costs associated with the tender offers. Adjusted EBITDA decreased 7.8 percent versus the year-ago period to $1.5 billion, including 3.2 percentage point impact from unfavorable currency and a negative 1.4 percentage point impact from divestitures. Excluding these factors, the decrease was driven by declines in the United States and Canada, as well as higher general corporate expenses that more than offset growth in EMEA. Adjusted EPS decreased 9.2% percent to $0.69, reflecting lower Adjusted EBITDA, higher taxes on adjusted earnings in the current period, and lower interest expense versus the year-ago period.
Kraft Heinz (NASDAQ: KHC) stock price history
The image below obtained from Google, shows the stock price history over the last 4 odd years. And its been a very miserable time for Kraft Heinz stockholders. 4 years ago the stock of Kraft Heinz was trading at around $77.30 a stock and its currently trading at $33.34 a stock. That's a loss of -56.9% suffered by Kraft Heinz stockholders over the last 4 years.
The stock of Kraft Heinz is trading at a lot closer to its 52 week low of $24.86 than it is to its 52 week high of $54.87 a stock, which to us is a clear indication that the short term sentiment and momentum of Kraft Heinz stock is very negative at this point in time,
The stock of Kraft Heinz is trading at a lot closer to its 52 week low of $24.86 than it is to its 52 week high of $54.87 a stock, which to us is a clear indication that the short term sentiment and momentum of Kraft Heinz stock is very negative at this point in time,
Kraft Heinz stock price history over the last 4 odd years.
Recent coverage of Kraft Heinz
The extract below discusses the latest news regarding Kraft Heinz as obtained from TheStreet.com
Kraft Heinz Co. (KHC - Get Report) posted stronger-than-expected third quarter earnings Thursday and said it was making "good progress" in identifying the root causes of its past performance amid a wide-ranging turnaround plan under new CEO Miguel Patricio. Kraft Heinz said adjusted earnings for the three months ending in September came in a 69 cents per share, down 9.2% from the same period last year but well ahead of the Street consensus forecast of 54 cents per share. Group revenues, Kraft Heinz said, fell 4.38% to $6.1 billion, a figure that was largely in-line with analysts' estimates.
"While our third-quarter results remain below our potential, we showed sequential improvement versus the first half, and I believe we are beginning to operate the business better," said CEO Patricio, who joined the group in April. "We are making good progress in identifying and addressing the root causes of past performance, as well as setting our strategic direction." Although there is still much work ahead, we're encouraged by our improving performance, and are even more confident in our ability to turn around the Company and set a path of long term growth and profitability," he added.
Read the full article here
Kraft Heinz Co. (KHC - Get Report) posted stronger-than-expected third quarter earnings Thursday and said it was making "good progress" in identifying the root causes of its past performance amid a wide-ranging turnaround plan under new CEO Miguel Patricio. Kraft Heinz said adjusted earnings for the three months ending in September came in a 69 cents per share, down 9.2% from the same period last year but well ahead of the Street consensus forecast of 54 cents per share. Group revenues, Kraft Heinz said, fell 4.38% to $6.1 billion, a figure that was largely in-line with analysts' estimates.
"While our third-quarter results remain below our potential, we showed sequential improvement versus the first half, and I believe we are beginning to operate the business better," said CEO Patricio, who joined the group in April. "We are making good progress in identifying and addressing the root causes of past performance, as well as setting our strategic direction." Although there is still much work ahead, we're encouraged by our improving performance, and are even more confident in our ability to turn around the Company and set a path of long term growth and profitability," he added.
Read the full article here
Heinz Board Room. Image obtained from Zuidas.publikaan.nl
Kraft Heinz (NASDAQ: KHC) stock valuation
So what do we value Kraft Heinz stock at after the release of their 3rd quarter 2019 earnings report? Based on Kraft Heinz's earnings report our valuation models provides a target (full value) price for Kraft Heinz at $47.30 a stock. We therefore believe that the stock of Kraft Heinz is undervalued.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $47.30 therefore we believe a good entry point into Kraft Heinz stock is at $42.60 or below. We expect the stock of Kraft Heinz to kick up strongly from current levels to levels closer to our target price (full value price) in coming weeks and moths as we believe it is undervalued.
Since Kraft Heinz is trading at well below our suggested entry price we rate the stock of Kraft Heinz as a buy
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $47.30 therefore we believe a good entry point into Kraft Heinz stock is at $42.60 or below. We expect the stock of Kraft Heinz to kick up strongly from current levels to levels closer to our target price (full value price) in coming weeks and moths as we believe it is undervalued.
Since Kraft Heinz is trading at well below our suggested entry price we rate the stock of Kraft Heinz as a buy
Next earnings release of Kraft Heinz
It is expected that Kraft Heinz will publish their 4th quarter and full year earnings for their 2019 fiscal year in early February 2020