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Kraft Heinz (KHC) Stock Up Slightly Ahead of Q2 Earnings: What To Watch

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Kraft Heinz Company (KHC - Free Report) saw its stock price pop 0.20% during regular trading hours Thursday directly ahead of the release of its second-quarter financial results Friday morning. However, shares of KHC have slipped over 5% in the last month, so let’s see what investors should expect from Kraft Heinz.

Kraft Heinz has been negatively impacted by shifting consumer habits over the last few years, while smaller brands have also grabbed more market share. Some of KHC’s key categories like ready-to-drink beverages, frozen meals, and salad dressings face major challenges, which helped contribute to the company’s overall 1.1% sales decline in 2017. Last quarter, the company saw its net sales dip by 0.3%. More alarmingly, U.S. sales fell by 3.3% in Q1.

And things don’t look like they will get much better for Kraft Heinz in the second quarter. The company is projected to see its Q2 revenues fall by 1.56% to $6.57 billion, based on our current Zacks Consensus Estimate. The firm is also expected to see its adjusted quarterly earnings fall by 7.14% to hit $0.91 per share.

Still, we need to see how likely it is that Kraft Heinz can outperform its earnings estimate. Luckily we can turn to our exclusive Earnings ESP figure to do so.

Zacks Earnings ESP (Expected Surprise Prediction) compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter. The Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change.

This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.

A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.

KHC sports an Earnings ESP of -0.69% and a Zacks Rank #4 (Sell), which means there is a good chance Kraft Heinz misses our quarterly earnings estimate. The company has also come up short of our earnings estimates in two out of the previous five quarters.  

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