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On Dec 12, we issued an updated research report on The Kraft Heinz Company (KHC - Free Report) , the fifth-largest branded food and beverage company in the world.
Although this Pittsburgh, PA-based packaged food company has been witnessing soft sales in recent times, a strong brand portfolio, cost-saving initiatives, innovation and marketing efforts increase its growth prospects.
Investors should note that, shares of Kraft Heinz gained over 15% year to date, outperforming the 6.1% growth for the Zacks categorized Food-Miscellaneous Diversified industry. Estimates for the current year moved up slightly over the last 60 days. Moreover, Kraft Heinz’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters with an average beat of 13.88%.
Advantages
Kraft Heinz markets many iconic brands which enjoy long-standing consumer recognition. Eight of its brands generate more than $1 billion in sales including Oscar Mayer, Ore Ida, Maxwell House, Planters, Philadelphia, Velveeta, and Smart Ones.
Kraft Heinz has implemented many cost-saving initiatives, including the integration of Kraft Foods and Heinz. The company plans to save $1.5 billion in annual costs by the end of 2017, focusing primarily on work-force reductions along with factory closures and consolidations.
The company generated about $865 million in cost savings in the first nine months of 2016 and $990 million since the inception of the Integration Program. Other productivity improvement initiatives include programs such as zero-based budgeting, modernization and capability building within the manufacturing footprint and building a performance driven culture in the company.
Concerns
The company is seeing top-line weakness over the past several quarters. Soft spending by U.S. shoppers along with rapid changes in consumer preferences and behavior are hurting the company’s categories.
Also, foreign exchange is a major headwind for Kraft Heinz with a considerable percentage of its revenues coming from outside the U.S. Though the dollar has weakened slightly in 2016 compared with the previous year, the negative currency impact is still quite significant. Currency headwinds hurt sales by 3.1% in the first nine months of 2016.
Further, a soft consumer spending environment in the North American food industry remains a cause of concern as it is leading to sluggish growth and slowdown in consumption over the past few quarters.
Zacks Rank & Other Key Picks
Kraft Heinz carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the same industry include Mondelez International, Inc. (MDLZ - Free Report) , Lancaster Colony Corporation (LANC - Free Report) and Tate & Lyle plc (TATYY - Free Report) . All three companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1(Strong Buy) Rank stocks here.
Mondelez’s earnings are expected to increase 11.4% in 2016.
Lancaster is expected to see a 7.3% increase in fiscal 2017 earnings.
Tate & Lyle is expected to witness 12% decline in fiscal 2017 earnings.
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How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>
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Kraft Heinz's (KHC) Growth Prospects Bright; Risks Remain
On Dec 12, we issued an updated research report on The Kraft Heinz Company (KHC - Free Report) , the fifth-largest branded food and beverage company in the world.
Although this Pittsburgh, PA-based packaged food company has been witnessing soft sales in recent times, a strong brand portfolio, cost-saving initiatives, innovation and marketing efforts increase its growth prospects.
Investors should note that, shares of Kraft Heinz gained over 15% year to date, outperforming the 6.1% growth for the Zacks categorized Food-Miscellaneous Diversified industry. Estimates for the current year moved up slightly over the last 60 days. Moreover, Kraft Heinz’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters with an average beat of 13.88%.
Advantages
Kraft Heinz markets many iconic brands which enjoy long-standing consumer recognition. Eight of its brands generate more than $1 billion in sales including Oscar Mayer, Ore Ida, Maxwell House, Planters, Philadelphia, Velveeta, and Smart Ones.
Kraft Heinz has implemented many cost-saving initiatives, including the integration of Kraft Foods and Heinz. The company plans to save $1.5 billion in annual costs by the end of 2017, focusing primarily on work-force reductions along with factory closures and consolidations.
The company generated about $865 million in cost savings in the first nine months of 2016 and $990 million since the inception of the Integration Program. Other productivity improvement initiatives include programs such as zero-based budgeting, modernization and capability building within the manufacturing footprint and building a performance driven culture in the company.
Concerns
The company is seeing top-line weakness over the past several quarters. Soft spending by U.S. shoppers along with rapid changes in consumer preferences and behavior are hurting the company’s categories.
Also, foreign exchange is a major headwind for Kraft Heinz with a considerable percentage of its revenues coming from outside the U.S. Though the dollar has weakened slightly in 2016 compared with the previous year, the negative currency impact is still quite significant. Currency headwinds hurt sales by 3.1% in the first nine months of 2016.
Further, a soft consumer spending environment in the North American food industry remains a cause of concern as it is leading to sluggish growth and slowdown in consumption over the past few quarters.
Zacks Rank & Other Key Picks
Kraft Heinz carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the same industry include Mondelez International, Inc. (MDLZ - Free Report) , Lancaster Colony Corporation (LANC - Free Report) and Tate & Lyle plc (TATYY - Free Report) . All three companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1(Strong Buy) Rank stocks here.
Mondelez’s earnings are expected to increase 11.4% in 2016.
Lancaster is expected to see a 7.3% increase in fiscal 2017 earnings.
Tate & Lyle is expected to witness 12% decline in fiscal 2017 earnings.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>