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Kraft Heinz (KHC) on Track With Long-Term Targets, Inflation a Woe
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Several companies in the food space continue to face inflationary pressure across their businesses. One such company bearing the brunt of this trend is The Kraft Heinz Company (KHC - Free Report) . Recently, the consumer goods and beverage brands company raised its inflation forecast while reaffirming 2022 guidance.
Kraft Heinz now projects full-year inflation of almost 20%, higher than the earlier expectation of high teen inflation. Management still expects 2022 organic net sales growth in the high single digits compared with the year-ago period.
For 2022, adjusted EBITDA is anticipated to be in the $5.8-$6 billion range, with nearly 43% to 57% third and fourth quarter split compared with the 45% to 55% split expected earlier. The altered split reflects the timing of inflation versus offsetting price realization and the presence of a 53rd week during the fourth quarter. The adjusted EBITDA view considers unfavorable currency impact, effects of divestitures and solid organic net sales. The view also reflects Kraft Heinz’s continuing efforts to manage inflationary pressures via unlocking gross efficiencies.
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Long-Term Growth Targets
Kraft Heinz recently came out with some details on its long-term algorithm. The company expects long-term organic net sales growth of 2-3%. Management envisions driving this growth via its three strategic pillars of growth, with every pillar likely to contribute nearly one percentage point of growth. The company projects North America Zone Retail to represent roughly two-thirds of total organic net sales and grow 1-2%. Foodservice is likely to represent nearly 15% of total organic net sales and grow in mid-to-high single digits. Emerging Markets Retail, in Kraft Heinz’s International Zone, is projected to represent almost 10% of total organic net sales and increase double digits.
Adjusted EBITDA growth is envisioned in the range of 4-6% in the long run, fueled by organic net sales growth and gross margin expansion, among other reasons. Management expects to see growth of 6-8% in adjusted earnings per share (EPS) in the long term. This view takes into account the projected adjusted EBITDA growth and lower interest expense somewhat offset by higher depreciation.
In addition, Kraft Heinz updated its long-run net leverage target ratio to nearly three times from consistently below four times. We note that, Kraft Heinz is committed to providing solid return of capital to shareholders.
Shares of the Zacks Rank #3 (Hold) company have increased 0.4% year to date against the industry’s 2.1% decline.
Chef’s Warehouse, a distributor of specialty food products in the United States, currently flaunts a Zacks Rank #1 (Strong Buy). CHEF has a trailing four-quarter earnings surprise of 355.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Chef Warehouse’s current financial year sales suggests growth of 40.7% from the year-ago reported numbers.
Nomad Foods, which manufactures and distributes frozen foods, currently has a Zacks Rank of 2 (Buy). NOMD has a trailing four-quarter earnings surprise of 11.2%, on average.
The Zacks Consensus Estimate for NOMD’s current financial year sales suggests a decline of 2.6% from the year-ago period’s corresponding reported figures.
Celsius Holdings, which develops, processes, markets, distributes and sells functional drinks and liquid supplements, carries a Zacks Rank #2 at present. Celsius Holdings delivered an earnings surprise of 118.8% in the last reported quarter.
The Zacks Consensus Estimate for CELH’s current financial year sales suggests growth of 97.3% from the year-ago period’s reported figures.
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Kraft Heinz (KHC) on Track With Long-Term Targets, Inflation a Woe
Several companies in the food space continue to face inflationary pressure across their businesses. One such company bearing the brunt of this trend is The Kraft Heinz Company (KHC - Free Report) . Recently, the consumer goods and beverage brands company raised its inflation forecast while reaffirming 2022 guidance.
Kraft Heinz now projects full-year inflation of almost 20%, higher than the earlier expectation of high teen inflation. Management still expects 2022 organic net sales growth in the high single digits compared with the year-ago period.
For 2022, adjusted EBITDA is anticipated to be in the $5.8-$6 billion range, with nearly 43% to 57% third and fourth quarter split compared with the 45% to 55% split expected earlier. The altered split reflects the timing of inflation versus offsetting price realization and the presence of a 53rd week during the fourth quarter. The adjusted EBITDA view considers unfavorable currency impact, effects of divestitures and solid organic net sales. The view also reflects Kraft Heinz’s continuing efforts to manage inflationary pressures via unlocking gross efficiencies.
Image Source: Zacks Investment Research
Long-Term Growth Targets
Kraft Heinz recently came out with some details on its long-term algorithm. The company expects long-term organic net sales growth of 2-3%. Management envisions driving this growth via its three strategic pillars of growth, with every pillar likely to contribute nearly one percentage point of growth. The company projects North America Zone Retail to represent roughly two-thirds of total organic net sales and grow 1-2%. Foodservice is likely to represent nearly 15% of total organic net sales and grow in mid-to-high single digits. Emerging Markets Retail, in Kraft Heinz’s International Zone, is projected to represent almost 10% of total organic net sales and increase double digits.
Adjusted EBITDA growth is envisioned in the range of 4-6% in the long run, fueled by organic net sales growth and gross margin expansion, among other reasons. Management expects to see growth of 6-8% in adjusted earnings per share (EPS) in the long term. This view takes into account the projected adjusted EBITDA growth and lower interest expense somewhat offset by higher depreciation.
In addition, Kraft Heinz updated its long-run net leverage target ratio to nearly three times from consistently below four times. We note that, Kraft Heinz is committed to providing solid return of capital to shareholders.
Shares of the Zacks Rank #3 (Hold) company have increased 0.4% year to date against the industry’s 2.1% decline.
Some Better-Ranked Food Bets
Some other top-ranked stocks are The Chef's Warehouse (CHEF - Free Report) , Nomad Foods (NOMD - Free Report) and Celsius Holdings (CELH - Free Report) .
Chef’s Warehouse, a distributor of specialty food products in the United States, currently flaunts a Zacks Rank #1 (Strong Buy). CHEF has a trailing four-quarter earnings surprise of 355.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Chef Warehouse’s current financial year sales suggests growth of 40.7% from the year-ago reported numbers.
Nomad Foods, which manufactures and distributes frozen foods, currently has a Zacks Rank of 2 (Buy). NOMD has a trailing four-quarter earnings surprise of 11.2%, on average.
The Zacks Consensus Estimate for NOMD’s current financial year sales suggests a decline of 2.6% from the year-ago period’s corresponding reported figures.
Celsius Holdings, which develops, processes, markets, distributes and sells functional drinks and liquid supplements, carries a Zacks Rank #2 at present. Celsius Holdings delivered an earnings surprise of 118.8% in the last reported quarter.
The Zacks Consensus Estimate for CELH’s current financial year sales suggests growth of 97.3% from the year-ago period’s reported figures.