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Kraft Heinz (KHC) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

Kraft Heinz (KHC) closed the most recent trading day at $30.80, moving +0.49% from the previous trading session. This change outpaced the S&P 500's 0.46% gain on the day. At the same time, the Dow added 0.9%, and the tech-heavy Nasdaq gained 0.59%.

Coming into today, shares of the maker of Oscar Mayer meats, Jell-O pudding and Velveeta cheese had gained 0.79% in the past month. In that same time, the Consumer Staples sector gained 0.77%, while the S&P 500 gained 4.04%.

Investors will be hoping for strength from KHC as it approaches its next earnings release. On that day, KHC is projected to report earnings of $0.76 per share, which would represent a year-over-year decline of 24%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $6.64 billion, down 0.76% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $2.79 per share and revenue of $25.84 billion, which would represent changes of -20.96% and -1.58%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for KHC. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.93% lower. KHC is holding a Zacks Rank of #4 (Sell) right now.

In terms of valuation, KHC is currently trading at a Forward P/E ratio of 10.98. Its industry sports an average Forward P/E of 19.03, so we one might conclude that KHC is trading at a discount comparatively.

It is also worth noting that KHC currently has a PEG ratio of 2.99. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Food - Miscellaneous was holding an average PEG ratio of 2.34 at yesterday's closing price.

The Food - Miscellaneous industry is part of the Consumer Staples sector. This industry currently has a Zacks Industry Rank of 151, which puts it in the bottom 42% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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