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H. J. Heinz Company Message Board

  • chemsysus chemsysus Aug 28, 2012 2:45 PM Flag

    HNZ to $68

    HNZ to earn at least $3.40 for the year. With a PE of 20, that makes HNZ a $68 stock. Considering the dividend and the consistent growth in revenue and earnings, HNZ merits a PE greater than 20. The stock price should go up further from here, a mere $58. Hold long for the ride to $68, and beyond.

    Sentiment: Hold

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    • EPS not growing at 20% per year, but at 8-10%. If you warrant a PEG of 2, you'll get the P/E of 20 on the high end, but it's a stretch. It prices HNZ for perfection.

      • 1 Reply to vwdiesel10
      • With the current low interest rate environment, a company with stable revenue and earnings qualifies for a PE of 20. In the past, during times of high interest rates, only a company with strong revenue and earnings growth had a PE of 20 or more. The PE is a function of growth rate and expectation for the future. But valuation is also a function of the investment alternatives like bonds, which return little. HNZ has a PEG of 2.35, which is high. With HNZ, you get reliable revenue and earnings growth plus a 3.6% dividend at the current payout, and the payout goes up over time. I agree, HNZ is priced for perfection; however, HNZ is delivering solid performance, if not perfection.

        Sentiment: Hold