Pittsburgh-based The Kraft Heinz Company (KHC - Free Report) is one of the largest consumer packaged food and beverage companies in North America. It manufactures and markets products like condiments and sauces, cheese as well as dairy, meats, refreshment beverages, coffee, and other grocery items. Popular brands include Heinz, Kraft, Oscar Mayer, Planters, Philadelphia, Velveeta, Lunchables, Maxwell House, Capri Sun, and Ore-Ida.
Q4 Earnings Weak
Shares of KHC slid as much as 7% after the packaged food giant released disappointing fourth quarter results.
Organic sales (which takes out the impact of divestitures, acquisitions, and foreign currency) fell 2.2%; sales volume and mix also dropped 4.2%, demonstrating that its brands are losing some market share.
In the U.S., Canada, and Rest of World regions, organic sales decreased, but Europe, Middle East, and Africa saw a small jump of 0.3%.
Total revenue declined 5.1% to $6.54 billion while adjusted earnings, despite beating our consensus estimate, declined 14.3%.
Management did not provide any guidance, but said that at its investor conference in May, it would outline a turnaround strategy.
KHC is now a Zacks Rank #5 (Strong Sell).
Shares of the consumer staples stock are down over 15% year-to-date, and have lost more than 43% in the last one year. The S&P 500 is up 3.2% and 19.7% in comparison.
Looking Ahead
"While our 2019 results were disappointing, we closed the year with performance consistent with our expectations, and driven by factors we anticipated…Our turnaround will take time, but we expect to make significant progress in 2020, laying a strong foundation for future growth,” said new CEO Miguel Patricio. Patricio took the helm about eight months ago.
Changing consumer tastes is also negatively affecting Kraft Heinz, as more and more shoppers choose organic and natural items over its core packaged food brands. There’s also the matter of debt. KHC currently has $30 billion in debt on its balance sheet.
Kraft Heinz has many challenges ahead of it, but management is looking towards cutting costs, optimizing marketing spending, and focusing on products with the best returns to help the company in the near-term.
Investors who are interested in adding a consumer staples peer should look at foodservice distributor US Foods (USFD - Free Report) . This Zacks Rank #1 (Strong Buy) stock is looking at 13.8% earnings growth for fiscal 2020.
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It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
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Pittsburgh-based The Kraft Heinz Company (KHC - Free Report) is one of the largest consumer packaged food and beverage companies in North America. It manufactures and markets products like condiments and sauces, cheese as well as dairy, meats, refreshment beverages, coffee, and other grocery items. Popular brands include Heinz, Kraft, Oscar Mayer, Planters, Philadelphia, Velveeta, Lunchables, Maxwell House, Capri Sun, and Ore-Ida.
Q4 Earnings Weak
Shares of KHC slid as much as 7% after the packaged food giant released disappointing fourth quarter results.
Organic sales (which takes out the impact of divestitures, acquisitions, and foreign currency) fell 2.2%; sales volume and mix also dropped 4.2%, demonstrating that its brands are losing some market share.
In the U.S., Canada, and Rest of World regions, organic sales decreased, but Europe, Middle East, and Africa saw a small jump of 0.3%.
Total revenue declined 5.1% to $6.54 billion while adjusted earnings, despite beating our consensus estimate, declined 14.3%.
Management did not provide any guidance, but said that at its investor conference in May, it would outline a turnaround strategy.
KHC is now a Zacks Rank #5 (Strong Sell).
Shares of the consumer staples stock are down over 15% year-to-date, and have lost more than 43% in the last one year. The S&P 500 is up 3.2% and 19.7% in comparison.
Looking Ahead
"While our 2019 results were disappointing, we closed the year with performance consistent with our expectations, and driven by factors we anticipated…Our turnaround will take time, but we expect to make significant progress in 2020, laying a strong foundation for future growth,” said new CEO Miguel Patricio. Patricio took the helm about eight months ago.
Changing consumer tastes is also negatively affecting Kraft Heinz, as more and more shoppers choose organic and natural items over its core packaged food brands. There’s also the matter of debt. KHC currently has $30 billion in debt on its balance sheet.
Kraft Heinz has many challenges ahead of it, but management is looking towards cutting costs, optimizing marketing spending, and focusing on products with the best returns to help the company in the near-term.
Investors who are interested in adding a consumer staples peer should look at foodservice distributor US Foods (USFD - Free Report) . This Zacks Rank #1 (Strong Buy) stock is looking at 13.8% earnings growth for fiscal 2020.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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