Kraft Heinz early Wednesday blamed food cost inflation for a rare revenue decline in the fourth quarter. Coca-Cola on Tuesday showed its pricing power as sales rose more than expected.
The beverage and snack giants are among the top five Warren Buffett stock holdings by number of shares, according to Berkshire Hathaway filings. Outlook was being closely watched by investors amid inflation and the rise of obesity drugs.
"In the fourth quarter, the industry faced headwinds that were driven by ongoing consumer pressure," Kraft Heinz CEO Carlos Abrams-Rivera said in the Q4 earnings release Wednesday. "Looking ahead, we expect some of these pressures to dissipate."
On Tuesday, Coca-Cola CEO James Quincey told CNBC that inflation is moderating in most global markets, after the company relied on higher prices to boost revenue.
Kraft Heinz Earnings, Kraft Heinz Stock
Estimates: Analysts expected Kraft Heinz earnings to decrease 9%, year over year, to 77 cents. Revenue was seen falling 5% to $6.985 billion.
Results: Kraft Heinz earned 78 cents per share, a penny above views. Revenue slid 7% to $6.86 billion, missing estimates and marking the first drop in six quarters.
The company's 2024 EPS guidance was roughly in line with analyst consensus views, with organic net sales seen flat or marginally higher.
Kraft Heinz stock tumbled 5.5% Wednesday, undercutting the 200-day moving average.
DaVita, a smaller holding in Berkshire's roughly $350 billion stock portfolio, jumped 8.6%. The operator of dialysis centers posted a Q4 earnings and revenue beat Wednesday.
Coca-Cola Earnings, Coca-Cola Stock
Estimates: Analysts expected Coca-Cola earnings to increase 9% year over year, to 49 cents. Revenue was seen at $10.675 billion, FactSet shows.
Results: On Tuesday, Coca-Cola posted earnings of 49 cents, in line with views, on revenue of $10.948 billion, ahead of estimates. Year over year, Coca-Cola earnings grew 8.9% and sales rose 7.4%.
The beverage maker continued to show its pricing power: Higher prices amid inflation during the quarter helped it offset a 1% volume decline in North America. Globally, unit case volume rose 2%, the earnings release showed. Rival PepsiCo earlier reported North American Q4 beverage volumes fell 6%.
For 2024, Coca-Cola, the Dow Jones beverage giant, guided revenue growth of 6%-7% and earnings growth of 4%-5%. It expects a 4% currency headwind in the current quarter.
Ahead of Coca-Cola's Q4 results, analysts were expecting 2024 revenue growth of 2.6% and earnings growth of 4.3%, FactSet shows.
Shares of Coca-Cola nudged down a fraction to 59.28 Wednesday, just below the 50-day moving average. Coca-Cola stock fell 0.6% in Tuesday's stock market trading.
The relative strength lines for Coca-Cola stock and Kraft Heinz, the blue lines in the charts provided, show significant lag. However, their 50-day moving averages are rising and recently crossed above the 200-day lines, a positive sign. Both stocks spent much of the past year stuck below those support levels.
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Warren Buffett Stocks
The two Warren Buffett stocks have navigated through food cost inflation with price hikes. Coca-Cola managed to pass rising costs to consumer without hurting sales.
But management warned food shoppers are starting to come under pressure. Another concern for investors is a new breed of obesity drugs, such as Wegovy and Ozempic, that some worry could dent food and beverage sales.
Both Coca-Cola and Kraft Heinz are dividend stocks, which Berkshire Hathaway chief and investing legend Buffett likes. Coca-Cola stock bears a 3.08% yield. Kraft Heinz yields 4.4%.
Among other packaged food stocks, WK Kellogg spiked 8% Tuesday as Q4 earnings and revenue beat estimates. The stock extended gains by 5.6% Wednesday.
Buffett's Berkshire does not own Kellogg shares.
