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Kraft Heinz: Cost Savings Drive Stock to a 52-Week High
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On Sep 2, shares of The Kraft Heinz Company (KHC - Free Report) rallied to a new 52-week high of $90.54. The stock pulled back to end the trading session on Friday at $89.61. The Pittsburgh, PA-based packaged food company has a market cap of around $109.11 billion and has seen its shares rise roughly 23.2% so far this year as against a 6.7% increase for the S&P 500 over the same period.
Formed last year by merging packaged food company, Kraft Foods and ketchup maker, H.J. Heinz Company, Kraft Heinz is one of the largest branded food and beverage companies in the world.
Although the company has been witnessing soft sales in recent times, cost savings have led to improved margins, mainly in the developed markets of the U.S. and Europe. A portion of its savings is also being re-invested in the business for innovation, brand building and marketing.
Kraft Heinz has implemented several cost saving initiatives that are expected to save $1.5 billion by the end of 2017, primarily focused on work-force reductions along with factory closures and consolidations. The company has garnered about $535 million of cost savings in the first half 2016.
Apart from marketing initiatives, Kraft Heinz is involved in various aggressive and innovative marketing programs. The company plans to focus on shifting advertising spend from non-working (like production costs, advertising agency costs) to working media (digital, print advertisements) and eliminate inefficient trade promotion spending. In fact, management intends to boost overall marketing spending in markets like the U.S. and Europe this year.
Given the positive sentiments, full-year 2016 earnings estimates have moved north by 5.5% while that for 2017 have increased 3.1%. Again, the stock has a 3-5 year expected EPS growth rate of 19.54%, with a low beta of 0.47.
Kraft Heinz carries a Zacks Rank #2 (Buy).
Other Key Picks
Other favorably ranked stocks in the consumer staples sector include Omega Protein Corporation , Tate & Lyle plc (TATYY - Free Report) and US Foods Holding Corp. (USFD - Free Report) , all sporting a Zacks Rank #1 (Strong Buy).
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Kraft Heinz: Cost Savings Drive Stock to a 52-Week High
On Sep 2, shares of The Kraft Heinz Company (KHC - Free Report) rallied to a new 52-week high of $90.54. The stock pulled back to end the trading session on Friday at $89.61. The Pittsburgh, PA-based packaged food company has a market cap of around $109.11 billion and has seen its shares rise roughly 23.2% so far this year as against a 6.7% increase for the S&P 500 over the same period.
KRAFT HEINZ CO Price and Consensus
KRAFT HEINZ CO Price and Consensus | KRAFT HEINZ CO Quote
What’s Driving Kraft Heinz?
Formed last year by merging packaged food company, Kraft Foods and ketchup maker, H.J. Heinz Company, Kraft Heinz is one of the largest branded food and beverage companies in the world.
Although the company has been witnessing soft sales in recent times, cost savings have led to improved margins, mainly in the developed markets of the U.S. and Europe. A portion of its savings is also being re-invested in the business for innovation, brand building and marketing.
Kraft Heinz has implemented several cost saving initiatives that are expected to save $1.5 billion by the end of 2017, primarily focused on work-force reductions along with factory closures and consolidations. The company has garnered about $535 million of cost savings in the first half 2016.
Apart from marketing initiatives, Kraft Heinz is involved in various aggressive and innovative marketing programs. The company plans to focus on shifting advertising spend from non-working (like production costs, advertising agency costs) to working media (digital, print advertisements) and eliminate inefficient trade promotion spending. In fact, management intends to boost overall marketing spending in markets like the U.S. and Europe this year.
Given the positive sentiments, full-year 2016 earnings estimates have moved north by 5.5% while that for 2017 have increased 3.1%. Again, the stock has a 3-5 year expected EPS growth rate of 19.54%, with a low beta of 0.47.
Kraft Heinz carries a Zacks Rank #2 (Buy).
Other Key Picks
Other favorably ranked stocks in the consumer staples sector include Omega Protein Corporation , Tate & Lyle plc (TATYY - Free Report) and US Foods Holding Corp. (USFD - Free Report) , all sporting a Zacks Rank #1 (Strong Buy).
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>