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The Kraft Heinz Co KHC

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Stock XNAS Rating as of
$32.80 −0.41 (1.23%)
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As of Delayed Price Pre-Open: $32.81 +0.01
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Company Report

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Kraft Heinz: We Upgrade Moat to Narrow as Revamped Strategic Course Yields Gains; Shares Appetizing

Erin Lash

We believe Kraft Heinz has finally broken the shackles of its past, and we now assign the firm a narrow moat based on its brand intangible assets and cost edge. Since abandoning past management's directive to prioritize near-term profitability and cash flows, Kraft Heinz has, over the past five years, prudently pursued durable efficiencies, elevated brand spending (behind marketing and product innovation to a mid-single-digit level of sales that is more commensurate with peers), enhanced its capabilities (related to category management and ecommerce), and leveraged its scale to respond more nimbly to changing market conditions.

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Price vs Fair Value

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KHC is trading at a 388% premium.
Price
$32.80
Fair Value
$18.00
Uncertainty
Medium
1-Star Price
$29.43
5-Star Price
$93.10
Economic Moat
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Capital Allocation
Krnmtfdh

Bulls Say, Bears Say

Bulls

Tempered exposure to private label (11% now versus 17% in 2019) and enhanced agility in responding to consumer trends should negate any lasting downdraft in Kraft Heinz's volume.

Bears

Inflation stemming from coffee, dairy, meats, wages, and transportation has yet to abate. It's possible Kraft Heinz will eventually struggle to pass the hit on to consumers without a more pronounced contraction in volume.

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Trading Information

Previous Close Price
$33.21
Day Range
$32.78–33.35
52-Week Range
$30.68–38.96
Bid/Ask
$32.80 / $33.12
Market Cap
$39.83 Bil
Volume/Avg
58 / 7.7 Mil

Key Statistics

Price/Earnings (Normalized)
11.01
Price/Sales
1.52
Dividend Yield (Trailing)
4.88%
Dividend Yield (Forward)
4.88%
Total Yield
6.02%

Company Profile

In July 2015, Kraft merged with Heinz to create the third-largest food and beverage manufacturer in North America behind PepsiCo and Nestle and the fifth-largest player in the world. Beyond its namesake brands, the combined firm's portfolio includes Oscar Mayer, Velveeta, and Philadelphia. While the retail channel drives around 85% of its total sales, the firm also operates a growing presence in the foodservice arena. Outside North America, Kraft Heinz's global reach counts a distribution network in Europe and emerging markets that drives about 25% of its consolidated sales base, as its products are sold in more than 190 countries and territories.
Sector
Consumer Defensive
Industry
Packaged Foods
Stock Style Box
Mid Value
Total Number of Employees
36,000
Website
https://www.kraftheinzcompany.com

Competitors

Valuation

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Metric
KHC
K
GIS
Price/Earnings (Normalized)
 11.0114.2714.53
Price/Book Value
 0.806.284.02
Price/Sales
 1.521.631.95
Price/Cash Flow
 8.4210.7812.06
Price/Earnings
KHC
K
GIS

Financial Strength

Metric
KHC
K
GIS
Quick Ratio
 0.510.350.33
Current Ratio
 1.090.620.66
Interest Coverage
 4.913.957.70
Quick Ratio
KHC
K
GIS

Profitability

Metric
KHC
K
GIS
Return on Assets (Normalized)
 4.07%7.27%8.71%
Return on Equity (Normalized)
 7.44%34.14%27.32%
Return on Invested Capital (Normalized)
 6.23%12.75%13.78%
Return on Assets
KHC
K
GIS
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