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Why Is Kraft Heinz (KHC) Up 6.3% Since the Last Earnings Report?
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A month has gone by since the last earnings report for The Kraft Heinz Company (KHC - Free Report) . Shares have added about 6.3% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Kraft Heinz Tops Q4 Earnings & Revenues Estimates
Earnings
Adjusted earnings per share of $0.91 surpassed the Zacks Consensus Estimate of $0.87 by 4.6%. Moreover, earnings surged 46.8% year over year on higher volumes and lower costs.
Sales
Reported sales of $6.857 billion beat the Zacks Consensus Estimate of $6.766 billion by 1.3% but declined 3.7% year over year. However, sales were down 3.7% owing to a 0.7% negative impact of currency headwinds and lower demand in the U.S. Additionally, an extra week in the year-ago quarter hurt results by 4.6%.
Organically (excluding currency), sales grew 1.6% on higher volume, partly offset by lower pricing in the quarter.
Volume/mix increased 1.7% in the quarter as against a 0.3% decline in the previous quarter. The improvement can be attributed to better results across the board.
Pricing was down 0.1% in the quarter as price increase to offset input cost inflation in Rest of World markets (mainly in Latin America) and gains in the U.S. were offset by the timing of promotional activities in Canada.
Adjusted EBITDA rose 3.3% to $1.937 billion in the fourth quarter backed by cost savings from restructuring activities and pricing gains in the U.S.
Quarterly Segment Discussion
U.S.: Adjusted net sales of $4.84 billion declined 3.1% year over year. However, organic sales grew 1.7% on higher volumes and pricing. Volume/mix increased 1.4% in the quarter in comparison to a 0.7% decline in the last quarter. Pricing increased 0.3%.
Gains from growth in coffee as well as innovation in macaroni & cheese were more than offset by declines in cold nuts and foodservice.
Canada: Adjusted net sales of $617 million declined 2.4% year over year (reported) on higher volume. Organically, its sales improved 1.2%. Volume/mix grew 4.3%.
Pricing decreased 3.1% due to the timing of promotional activities.
Europe: Adjusted net sales of $600 million declined 13.3% year over year due to currency headwinds. Organically, sales fell 1.5% amid a challenging consumer and retail environment. Volume/mix was up 1% as growth in Russia was partly offset by lower shipments in the U.K.
Pricing declined 2.5% due to increased promotional initiatives in the U.K. along with higher investments in innovation of infant food.
Rest of World: Adjusted net sales of $801 million decreased 0.7% year over year. Organically, sales grew 4.5% on higher volume/mix. While pricing increased 2.8%, volume/mix rose 1.7%.
Outlook Skewed Toward Second Half of 2017
2017 outlook comprises a 150 bps to 200 bps headwind to sales during first quarter given the Easter shift and some U.S. inventory drawdowns. Again, business reinvestment will remain elevated during the first half of 2017. Additionally, management continues to pursue best in class margins, but the phasing of incremental project savings will be weighted towards the second half.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
At this time, Kraft Heinz's stock has a strong Growth Score of 'B', though it is lagging a bit on the momentum front with a 'D'. Following the exact same course, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
The stock is suitable solely for growth based on our styles scores.
Outlook
The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Why Is Kraft Heinz (KHC) Up 6.3% Since the Last Earnings Report?
A month has gone by since the last earnings report for The Kraft Heinz Company (KHC - Free Report) . Shares have added about 6.3% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Kraft Heinz Tops Q4 Earnings & Revenues Estimates
Earnings
Adjusted earnings per share of $0.91 surpassed the Zacks Consensus Estimate of $0.87 by 4.6%. Moreover, earnings surged 46.8% year over year on higher volumes and lower costs.
Sales
Reported sales of $6.857 billion beat the Zacks Consensus Estimate of $6.766 billion by 1.3% but declined 3.7% year over year. However, sales were down 3.7% owing to a 0.7% negative impact of currency headwinds and lower demand in the U.S. Additionally, an extra week in the year-ago quarter hurt results by 4.6%.
Organically (excluding currency), sales grew 1.6% on higher volume, partly offset by lower pricing in the quarter.
Volume/mix increased 1.7% in the quarter as against a 0.3% decline in the previous quarter. The improvement can be attributed to better results across the board.
Pricing was down 0.1% in the quarter as price increase to offset input cost inflation in Rest of World markets (mainly in Latin America) and gains in the U.S. were offset by the timing of promotional activities in Canada.
Adjusted EBITDA rose 3.3% to $1.937 billion in the fourth quarter backed by cost savings from restructuring activities and pricing gains in the U.S.
Quarterly Segment Discussion
U.S.: Adjusted net sales of $4.84 billion declined 3.1% year over year. However, organic sales grew 1.7% on higher volumes and pricing. Volume/mix increased 1.4% in the quarter in comparison to a 0.7% decline in the last quarter. Pricing increased 0.3%.
Gains from growth in coffee as well as innovation in macaroni & cheese were more than offset by declines in cold nuts and foodservice.
Canada: Adjusted net sales of $617 million declined 2.4% year over year (reported) on higher volume. Organically, its sales improved 1.2%. Volume/mix grew 4.3%.
Pricing decreased 3.1% due to the timing of promotional activities.
Europe: Adjusted net sales of $600 million declined 13.3% year over year due to currency headwinds. Organically, sales fell 1.5% amid a challenging consumer and retail environment. Volume/mix was up 1% as growth in Russia was partly offset by lower shipments in the U.K.
Pricing declined 2.5% due to increased promotional initiatives in the U.K. along with higher investments in innovation of infant food.
Rest of World: Adjusted net sales of $801 million decreased 0.7% year over year. Organically, sales grew 4.5% on higher volume/mix. While pricing increased 2.8%, volume/mix rose 1.7%.
Outlook Skewed Toward Second Half of 2017
2017 outlook comprises a 150 bps to 200 bps headwind to sales during first quarter given the Easter shift and some U.S. inventory drawdowns. Again, business reinvestment will remain elevated during the first half of 2017. Additionally, management continues to pursue best in class margins, but the phasing of incremental project savings will be weighted towards the second half.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
The Kraft Heinz Company Price and Consensus
The Kraft Heinz Company Price and Consensus | The Kraft Heinz Company Quote
VGM Scores
At this time, Kraft Heinz's stock has a strong Growth Score of 'B', though it is lagging a bit on the momentum front with a 'D'. Following the exact same course, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
The stock is suitable solely for growth based on our styles scores.
Outlook
The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.