The Kraft Heinz Company KHC has been focused on boosting shareholder value via dividends and share buybacks. Management approved a share buyback program, allowing the company to repurchase shares worth up to $3 billion by Dec 26, 2026. This move is part of the company's broader capital allocation strategy.
The share repurchase program is intended to be funded with excess cash after accounting for disciplined capital spending, dividends, maintaining a targeted Net Leverage of 3.0X and exploring opportunities, such as acquisitions, divestitures and partnerships.
Notably, KHC reached its Net Leverage goal of 3.0X in the third quarter of 2023, achieving a milestone on its transformation path. The company's share repurchase program acts as an opportunity to provide value to stockholders, while reflecting its healthy financial status and confidence in prospects.
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Kraft Heinz ended the third quarter with cash and cash equivalents of $1,052 million. Net cash provided by operating activities was $2,620 million for the first nine months of 2023. The company generated a free cash flow of $1,841 million in the first nine months of 2023.
KHC has been making regular dividend payments and announced a quarterly cash dividend of 40 cents per share recently, payable Dec 29, 2023, to shareholders of record as of Dec 1. The company currently has a dividend yield of 1.6% and a free cash flow yield of 5.8%.
Kraft Heinz has been benefiting from strength in its three key pillars — Foodservice, Emerging Markets and U.S. Retail Grow platforms. Further, the company has been focused on enhancing productivity throughout its value chain and channeling operational efficiencies back into crucial areas. Robust pricing strategies have been protecting the company’s margins amid inflation.
Apart from this, strength in the operating model is an upside. Kraft Heinz laid out an operating model (in September 2020) incorporating five key elements — People with Purpose, Consumer Platforms, Ops Center, Partner Program and Fuel Our Growth.
These upsides are likely to keep the company going and stay committed to enhancing shareholder value. Shares of this Zacks Rank #2 (Buy) company have gained 3.3% in the past three months against the industry’s decline of 6.1%.
3 Other Hot Stocks to Consider
We have highlighted three other top-ranked stocks, namely Lamb Weston Holdings, Inc. LW, Celsius Holdings, Inc. CELH and Freshpet Inc. FRPT.
Lamb Weston is a leading global manufacturer, marketer and distributor of value-added frozen potato products, particularly French fries. It also provides a range of appetizers. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Lamb Weston Holdings’ current fiscal-year sales and EPS suggests growth of 28.3% and 24.8%, respectively, from the year-ago reported figures. LW has a trailing four-quarter earnings surprise of 46.2%, on average.
Celsius Holdings specializes in commercializing healthier, nutritional and functional foods, beverages and dietary supplements. The company currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for Celsius Holdings’ current financial-year sales and EPS suggests growth of 98.5% and 184.1%, respectively, from the year-ago reported figures.
Freshpet is a pet food company. The company manufactures and markets natural fresh foods, refrigerated meals, and treats for dogs and cats. The company currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for Freshpet’s current financial-year sales and EPS suggests growth of 26.8% and 27.1%, respectively, from the year-ago reported figures. FRPT has a trailing four-quarter earnings surprise of 7%, on average.
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