Pittsburgh, Pennsylvania-based The Kraft Heinz Company (KHC) is a prominent manufacturer and marketer of food and beverage products. Its offerings include sauces, cheese, meals, meats, refreshment beverages, coffee, and more. With a market cap of $43.1 billion, Kraft Heinz’s operations span North America and internationally. The food giant is expected to release its Q3 earnings before the market opens on Wednesday, Oct. 30.
Ahead of the event, analysts expect Kraft Heinz to report a profit of $0.74 per share, up 2.8% from $0.72 per share reported in the year-ago quarter. The company has surpassed Wall Street’s adjusted EPS projections in each of the past four quarters. Its adjusted EPS for the last reported quarter declined 1.3% year-over-year to $0.78 but exceeded the consensus estimates by 6.9%.
For fiscal 2024, analysts expect Kraft Heinz to report an adjusted EPS of $3.01, up 1% from $2.98 in fiscal 2023. In fiscal 2025, its adjusted EPS is expected to grow 4.3% year-over-year to $3.14.
KHC stock has declined 4% on a YTD basis, substantially underperforming the S&P 500 Index’s ($SPX) 22.7% gains and the Consumer Staples Select Sector SPDR Fund’s (XLP) 13.2% returns during the same time frame.
Despite missing Wall Street’s topline estimates, shares of Kraft Heinz rose 4.1% after the release of its Q2 earnings on Jul. 31. The company reported a 3.6% year-over-year decrease in net sales to $6.5 billion, due to a drop in sales reported under all the geographies with net sales from North America dropping by 3.1%, International Developed Markets by 5%, and Emerging Markets by as much as 5.7%. Observing the lackluster performance during the first half of 2024, the company reduced its full-year organic net sales growth guidance and now expects it to be down 2% to flat compared to the prior year.
The company’s net income to shareholders dropped from $1 billion in the year-ago quarter to $102 million, however, it primarily was due to the goodwill impairment cost of $854 million incurred during the quarter. The company showcased a substantial improvement in gross margin which expanded 178 basis points to 35.4%, leading to a 1.5% growth in gross profit despite the drop in sales. Additionally, the company exceeded analysts’ earnings expectations which attributed to the increase in stock prices.
The consensus opinion on KHC stock is moderately bullish, with an overall “Moderate Buy” rating. Out of the 17 analysts covering the stock, eight recommend a “Strong Buy,” eight advise a “Hold,” and one suggests a “Strong Sell” rating. The mean price target of $38 represents a potential upside of 7.1% from current price levels.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
