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Kraft Heinz (KHC) Looks Attractive on Pricing & Transformation
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The Kraft Heinz Company (KHC - Free Report) appears well positioned, courtesy of effective pricing strategies. The consumer products company is on track to transform its business to unleash its full potential. The company is focused on strategic growth pillars, which is yielding. These factors boosted KHC’s third-quarter 2023 results, with the top and the bottom line increasing year over year.
The Zacks Rank #2 (Buy) company’s shares have increased 9.6% in the past three months against the industry’s 2.2% decline.
Let’s delve deeper.
Effective Pricing Drives Growth
Kraft Heinz is undertaking strategic pricing initiatives to improve its performance. In fact, robust pricing strategies have been shielding margin performance amid inflation. In the third quarter of 2023, the company’s organic net sales increased 1.7% on favorable pricing to the tune of 7.1 percentage points — stemming from higher list prices to counter escalated input costs. Adjusted gross margin expanded 396 basis points (bps) to 34%, driven by pricing actions undertaken to offset inflation, solid gross supply chain efficiencies and a favorable mix in North America. Management expects an adjusted gross margin expansion of 200-250 bps, driven by pricing and efficiencies in 2023.
Transformation Efforts Solid
Kraft Heinz is committed to accelerating its profit and enhancing the long-term shareholders’ value. As part of its transformation phase, management unveiled AGILE@SCALE in February 2022. The strategy helps Kraft Heinz to improve its agile expertise and capabilities via partnerships with technology giants and cutting-edge innovators.
Management is on track to build its innovation pipeline aided by the Agile Innovation Engine. Strength in Kraft Heinz’s AGILE@SCALE and strategic partnerships are generating solutions throughout the value chain to drive growth and efficiency. As part of the AGILE@SCALE strategy, management is building digital-first solutions to fuel gross efficiencies.
Growth Pillars on Track
Kraft Heinz has been benefiting from strength in its three key pillars — Foodservice, Emerging Markets and U.S. Retail Grow platforms. In the Foodservice business, management prioritizes higher margin spaces and undertakes customer-friendly innovations to drive growth. Kraft Heinz’s data-driven and repeatable go-to-market model has been yielding across Emerging Markets. Strength in the company’s Heinz brand bodes well in such markets.
The Road Ahead Looks Promising
Kraft Heinz is focused on enhancing productivity throughout its value chain and channeling operational efficiencies into crucial areas. These investments are pivotal to KHC’s strategic framework. Strength in the company’s transformations coupled with gains from sales growth in the company’s three key pillars bodes well.
Management expects adjusted EBITDA to increase 5-7% at constant currency. The adjusted earnings per share (EPS) for 2023 are projected in the range of $2.91-$2.99, reflecting growth from the year-ago quarter’s level.
The Zacks Consensus Estimate for MGP Ingredients’ current financial year sales and EPS suggests growth of 6% and 14.2%, respectively, from the year-ago reported figures. MGPI has a trailing four-quarter earnings surprise of 16.2% on average.
Celsius Holdings (CELH - Free Report) , which offers functional drinks and liquid supplements, currently carries a Zacks Rank #2. CELH delivered an earnings surprise of 81.6% in the third quarter of 2023.
The Zacks Consensus Estimate for Celsius Holdings’ current financial year sales and earnings suggests growth of 98.5% and 184.1%, respectively, from the year-ago reported numbers.
Vital Farms Inc. (VITL - Free Report) offers a range of produced pasture-raised foods. It currently has a Zacks Rank #2. VITL has a trailing four-quarter earnings surprise of 145% on average.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales suggests growth of 29.4% from the year-ago reported figure.
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Kraft Heinz (KHC) Looks Attractive on Pricing & Transformation
The Kraft Heinz Company (KHC - Free Report) appears well positioned, courtesy of effective pricing strategies. The consumer products company is on track to transform its business to unleash its full potential. The company is focused on strategic growth pillars, which is yielding. These factors boosted KHC’s third-quarter 2023 results, with the top and the bottom line increasing year over year.
The Zacks Rank #2 (Buy) company’s shares have increased 9.6% in the past three months against the industry’s 2.2% decline.
Let’s delve deeper.
Effective Pricing Drives Growth
Kraft Heinz is undertaking strategic pricing initiatives to improve its performance. In fact, robust pricing strategies have been shielding margin performance amid inflation. In the third quarter of 2023, the company’s organic net sales increased 1.7% on favorable pricing to the tune of 7.1 percentage points — stemming from higher list prices to counter escalated input costs. Adjusted gross margin expanded 396 basis points (bps) to 34%, driven by pricing actions undertaken to offset inflation, solid gross supply chain efficiencies and a favorable mix in North America. Management expects an adjusted gross margin expansion of 200-250 bps, driven by pricing and efficiencies in 2023.
Transformation Efforts Solid
Kraft Heinz is committed to accelerating its profit and enhancing the long-term shareholders’ value. As part of its transformation phase, management unveiled AGILE@SCALE in February 2022. The strategy helps Kraft Heinz to improve its agile expertise and capabilities via partnerships with technology giants and cutting-edge innovators.
Management is on track to build its innovation pipeline aided by the Agile Innovation Engine. Strength in Kraft Heinz’s AGILE@SCALE and strategic partnerships are generating solutions throughout the value chain to drive growth and efficiency. As part of the AGILE@SCALE strategy, management is building digital-first solutions to fuel gross efficiencies.
Growth Pillars on Track
Kraft Heinz has been benefiting from strength in its three key pillars — Foodservice, Emerging Markets and U.S. Retail Grow platforms. In the Foodservice business, management prioritizes higher margin spaces and undertakes customer-friendly innovations to drive growth. Kraft Heinz’s data-driven and repeatable go-to-market model has been yielding across Emerging Markets. Strength in the company’s Heinz brand bodes well in such markets.
The Road Ahead Looks Promising
Kraft Heinz is focused on enhancing productivity throughout its value chain and channeling operational efficiencies into crucial areas. These investments are pivotal to KHC’s strategic framework. Strength in the company’s transformations coupled with gains from sales growth in the company’s three key pillars bodes well.
Management expects adjusted EBITDA to increase 5-7% at constant currency. The adjusted earnings per share (EPS) for 2023 are projected in the range of $2.91-$2.99, reflecting growth from the year-ago quarter’s level.
Some Other Top-Ranked Stocks
MGP Ingredients, Inc. (MGPI - Free Report) produces and markets ingredients and distillery products to the packaged goods industry. The company currently has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for MGP Ingredients’ current financial year sales and EPS suggests growth of 6% and 14.2%, respectively, from the year-ago reported figures. MGPI has a trailing four-quarter earnings surprise of 16.2% on average.
Celsius Holdings (CELH - Free Report) , which offers functional drinks and liquid supplements, currently carries a Zacks Rank #2. CELH delivered an earnings surprise of 81.6% in the third quarter of 2023.
The Zacks Consensus Estimate for Celsius Holdings’ current financial year sales and earnings suggests growth of 98.5% and 184.1%, respectively, from the year-ago reported numbers.
Vital Farms Inc. (VITL - Free Report) offers a range of produced pasture-raised foods. It currently has a Zacks Rank #2. VITL has a trailing four-quarter earnings surprise of 145% on average.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales suggests growth of 29.4% from the year-ago reported figure.