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Kraft Heinz (KHC) Q1 Earnings Beat Estimates, Sales Up Y/Y
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The Kraft Heinz Company (KHC - Free Report) reported stellar first-quarter 2021 results, wherein both the top and the bottom lines not only surpassed the Zacks Consensus Estimate but also improved year over year. Markedly, this manufacturer and marketer of food and beverage products registered strong net sales, favorable product mix and lower general corporate expenses. Also, sturdy performance across all business segments contributed to the company’s upbeat results.
Let’s Delve Deeper
Kraft Heinz posted adjusted earnings of 72 cents a share that handily beat Zacks Consensus Estimate of 60 cents. The quarterly earnings surged 24.1% from 58 cents reported in the year-ago period owing to increase in adjusted EBITDA, lower effective tax rate and reduced depreciation and amortization costs.
The company generated net sales of $6,394 million that increased 3.9% year over year and came ahead of the Zacks Consensus Estimate of $6,259.7 million. Net sales growth included a 1.4 percentage point favorable impact from currency.
Notably, organic net sales rose 2.5% despite an adverse impact from exiting the McCafé licensing agreement. We note that positive contributions from all reporting segments favorably impacted the metric.
The company stated that pricing was up 1.5 percentage points year over year, reflecting lower retail promotions and revenue management gains that more than offset unfavorable trade expense timing. Additionally, volume/mix improved 1.0 percentage points thanks to favorable changes in retail inventory levels, mainly in developed markets where retail consumption continued to remain solid, as well as sustained growth in emerging markets. However, this was partly offset by continued softness in foodservice, adverse impact from exiting the McCafé licensing agreement, and fall in retail takeaway when compared with the prior year period that gained from robust pandemic-induced demand.
The Kraft Heinz Company Price, Consensus and EPS Surprise
We note that gross profit of $2,201 million increased 18.5% year over year during the quarter under review.
Again, adjusted EBITDA jumped 11.6% to $1,580 million, including a positive 1.2 percentage point impact from currency. Excluding the impact of currency, adjusted EBITDA grew on account of favorable pricing and product mix coupled with lower general corporate expenses. However, supply chain inflation and higher spending owing to strategic investments partly offset the same.
Segment Discussion
United States: Net sales of $4,608 million increased 2.5% year over year. During the quarter, pricing moved up 1.0 percentage points, while volume/mix increased 1.5 percentage points.
International: Net sales of $1,394 million were up 7.2% year over year. Markedly, pricing moved up 2.2 percentage points, while volume/mix increased 0.5 percentage points.
Canada: Net sales of $392 million rose 8.8% year over year. Notably, pricing moved up 4.9 percentage points but volume/mix declined 2.4 percentage points.
Other Financial Aspects
Kraft Heinz ended the quarter with cash and cash equivalents of $2,360 million, long-term debt of $27,074 million and total shareholders’ equity of $50,288 million. Further, net cash provided by operating activities was $810 million during the quarter. The company incurred capital expenditures of $227 million during the reported quarter. Markedly, it generated free cash flow of $583 million.
Outlook
Taking into account to-date performance, Kraft Heinz envisions a mid-single-digit percentage growth in both organic net sales and constant currency adjusted EBITDA, when compared with the 2019 period. Management highlighted that comparison to the 2019 period is more reasonable than the 2020 period that witnessed unprecedented pandemic-related demand.
However, when compared with the 2020 period, the outlook reflects a low-single-digit percentage decline in organic net sales and a mid-single-digit percentage fall in constant currency adjusted EBITDA.
Nonetheless, the company reiterated its expectations of delivering 2021 financial performance ahead of its strategic plan.
Kraft Heinz carries a Zacks Rank #4 (Sell). The stock has increased 21.9% in the past three months compared with the industry’s growth of 11.3%.
United Natural Foods, Inc. (UNFI - Free Report) , currently carrying a Zacks Rank #2 (Buy), has a trailing four-quarter earnings surprise of 13.6%, on average.
Medifast, Inc. (MED - Free Report) , a Zacks Rank #2 stock, has a trailing four-quarter earnings surprise of 17.4%, on average.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
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Kraft Heinz (KHC) Q1 Earnings Beat Estimates, Sales Up Y/Y
The Kraft Heinz Company (KHC - Free Report) reported stellar first-quarter 2021 results, wherein both the top and the bottom lines not only surpassed the Zacks Consensus Estimate but also improved year over year. Markedly, this manufacturer and marketer of food and beverage products registered strong net sales, favorable product mix and lower general corporate expenses. Also, sturdy performance across all business segments contributed to the company’s upbeat results.
Let’s Delve Deeper
Kraft Heinz posted adjusted earnings of 72 cents a share that handily beat Zacks Consensus Estimate of 60 cents. The quarterly earnings surged 24.1% from 58 cents reported in the year-ago period owing to increase in adjusted EBITDA, lower effective tax rate and reduced depreciation and amortization costs.
The company generated net sales of $6,394 million that increased 3.9% year over year and came ahead of the Zacks Consensus Estimate of $6,259.7 million. Net sales growth included a 1.4 percentage point favorable impact from currency.
Notably, organic net sales rose 2.5% despite an adverse impact from exiting the McCafé licensing agreement. We note that positive contributions from all reporting segments favorably impacted the metric.
The company stated that pricing was up 1.5 percentage points year over year, reflecting lower retail promotions and revenue management gains that more than offset unfavorable trade expense timing. Additionally, volume/mix improved 1.0 percentage points thanks to favorable changes in retail inventory levels, mainly in developed markets where retail consumption continued to remain solid, as well as sustained growth in emerging markets. However, this was partly offset by continued softness in foodservice, adverse impact from exiting the McCafé licensing agreement, and fall in retail takeaway when compared with the prior year period that gained from robust pandemic-induced demand.
The Kraft Heinz Company Price, Consensus and EPS Surprise
The Kraft Heinz Company price-consensus-eps-surprise-chart | The Kraft Heinz Company Quote
Other Operating Highlights
We note that gross profit of $2,201 million increased 18.5% year over year during the quarter under review.
Again, adjusted EBITDA jumped 11.6% to $1,580 million, including a positive 1.2 percentage point impact from currency. Excluding the impact of currency, adjusted EBITDA grew on account of favorable pricing and product mix coupled with lower general corporate expenses. However, supply chain inflation and higher spending owing to strategic investments partly offset the same.
Segment Discussion
United States: Net sales of $4,608 million increased 2.5% year over year. During the quarter, pricing moved up 1.0 percentage points, while volume/mix increased 1.5 percentage points.
International: Net sales of $1,394 million were up 7.2% year over year. Markedly, pricing moved up 2.2 percentage points, while volume/mix increased 0.5 percentage points.
Canada: Net sales of $392 million rose 8.8% year over year. Notably, pricing moved up 4.9 percentage points but volume/mix declined 2.4 percentage points.
Other Financial Aspects
Kraft Heinz ended the quarter with cash and cash equivalents of $2,360 million, long-term debt of $27,074 million and total shareholders’ equity of $50,288 million. Further, net cash provided by operating activities was $810 million during the quarter. The company incurred capital expenditures of $227 million during the reported quarter. Markedly, it generated free cash flow of $583 million.
Outlook
Taking into account to-date performance, Kraft Heinz envisions a mid-single-digit percentage growth in both organic net sales and constant currency adjusted EBITDA, when compared with the 2019 period. Management highlighted that comparison to the 2019 period is more reasonable than the 2020 period that witnessed unprecedented pandemic-related demand.
However, when compared with the 2020 period, the outlook reflects a low-single-digit percentage decline in organic net sales and a mid-single-digit percentage fall in constant currency adjusted EBITDA.
Nonetheless, the company reiterated its expectations of delivering 2021 financial performance ahead of its strategic plan.
Kraft Heinz carries a Zacks Rank #4 (Sell). The stock has increased 21.9% in the past three months compared with the industry’s growth of 11.3%.
3 Key Picks
J & J Snack Foods Corp. (JJSF - Free Report) has a trailing four-quarter earnings surprise of 111.7%, on average. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
United Natural Foods, Inc. (UNFI - Free Report) , currently carrying a Zacks Rank #2 (Buy), has a trailing four-quarter earnings surprise of 13.6%, on average.
Medifast, Inc. (MED - Free Report) , a Zacks Rank #2 stock, has a trailing four-quarter earnings surprise of 17.4%, on average.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>