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

Zacks Equity Research
Cathay (CATY) delivered earnings and revenue surprises of 4.65% and 1.33%, respectively, for the quarter ended June 2019. Do the numbers hold clues to what lies ahead for the stock?

In the latest trading session, Kraft Heinz (KHC) closed at $30.41, marking a +0.93% move from the previous day. This move outpaced the S&P 500's daily gain of 0.41%. At the same time, the Dow added 0.39%, and the tech-heavy Nasdaq gained 0.57%.

Prior to today's trading, shares of the maker of Oscar Mayer meats, Jell-O pudding and Velveeta cheese had lost 7.01% over the past month. This has lagged the Consumer Staples sector's gain of 1.91% and the S&P 500's gain of 0.1% in that time.

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 $0.60 per share, which would represent a year-over-year decline of 32.58%. Meanwhile, our latest consensus estimate is calling for revenue of $6.08 billion, down 3.49% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $2.82 per share and revenue of $25.85 billion. These totals would mark changes of -20.11% and -1.55%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for KHC. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. KHC is currently sporting a Zacks Rank of #3 (Hold).

Investors should also note KHC's current valuation metrics, including its Forward P/E ratio of 10.69. For comparison, its industry has an average Forward P/E of 18.43, which means KHC is trading at a discount to the group.

We can also see that KHC currently has a PEG ratio of 2.91. 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. KHC's industry had an average PEG ratio of 2.41 as of yesterday's close.

The Food - Miscellaneous industry is part of the Consumer Staples sector. This industry currently has a Zacks Industry Rank of 180, which puts it in the bottom 30% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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