We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
The Kraft Heinz (KHC) Down 10.1% Since Earnings Report: Can It Rebound?
Read MoreHide Full Article
A month has gone by since the last earnings report for The Kraft Heinz Company (KHC - Free Report) . Shares have lost about 10.1% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is KHC due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Recent Earnings
Kraft Heinz posted fourth-quarter 2017 results, wherein earnings and revenues missed the Zacks Consensus Estimate.
Earnings
Adjusted earnings per share of 90 cents missed the Zacks Consensus Estimate of 96 cents. Also, the bottom-line declined 1.1% from the year-ago figure on higher effective tax rate.
Sales
Reported sales of $6.88 billion fell marginally short of the Zacks Consensus Estimate of $6.90 billion by 0.3%. However, the top line inched up only 0.3% year over year owing to soft consumer demand in North America and Canada. The reported figure includes a favorable 0.9% impact from currency. Organically sales decreased 0.6%.
Volume/mix declined 1.6% compared with a decrease of 0.2% in the previous quarter. This was due to lower shipments across several categories in the United States as well as cheese and coffee in Canada.
Pricing was up 1% compared with an increase of 0.5% in the preceding quarter driven by price improvement in Rest of World markets and the United States.
Operating Highlights
Gross profit of $2.4 billion decreased 4% year over year.
Adjusted EBITDA was up 4% to $2 billion in the fourth quarter owing to cost initiatives, lower overhead costs and favorable pricing, partially offset by higher input costs and lower volume/mix.
Quarterly Segment Discussion
Kraft Heinz reports through four segments – the United States, Canada, Europe and Rest of World.
United States: Net sales of $4.8 billion declined 1.1% year over year. Organic sales also fell 1.1% on lower volumes. Volume/mix decreased 1.7% due to some distribution losses on Planters in the club channel, lower shipments in natural cheese and service-related losses in cold cuts. However, this was partially offset by higher demand in Lunchables, P3, Capri Sun ready-to-drink beverages, macaroni and cheese category. Pricing was up 0.6% owing to higher prices in cheese and seasonal items.
Canada: Net sales of $591 million declined 4.1% year over year with a 4.5% favorable impact from currency. Organically, sales declined 8.6% as well. Volume/mix was down 8.6% on lower inventory levels at retail, the discontinuation of select cheese products and lower shipments of coffee. Meanwhile, pricing remained flat compared with the prior-year quarter.
Europe: Net sales of $656 million improved 9.3% year over year with an 8.4% favorable currency impact. Organically, sales were up 0.9%. Volume/mix inched up 1.8% on robust consumption gains in condiments and sauces in Germany, Spain and France. However, pricing declined 0.9% due to changes in promotional spending in Italy, the UK and Russia.
Rest of World: Net sales of $843 million increased 5.2% year over year despite a 1.8% currency headwind. Organically, sales grew 7% on 5.7% higher pricing. Volume/mix increased 1.3% too.
Financials
Kraft Heinz’s ended the quarter with cash and cash investments of $1.6 billion, as of Dec 31, 2017 compared with $4.2 billion as of Dec 31, 2016.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. There have been four revisions lower for the current quarter.
At this time, KHC has a poor Growth Score of F, however its Momentum is doing a lot better with a C. The stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than momentum investors.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. It's no surprise KHC has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
The Kraft Heinz (KHC) Down 10.1% Since Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for The Kraft Heinz Company (KHC - Free Report) . Shares have lost about 10.1% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is KHC due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Recent Earnings
Kraft Heinz posted fourth-quarter 2017 results, wherein earnings and revenues missed the Zacks Consensus Estimate.
Earnings
Adjusted earnings per share of 90 cents missed the Zacks Consensus Estimate of 96 cents. Also, the bottom-line declined 1.1% from the year-ago figure on higher effective tax rate.
Sales
Reported sales of $6.88 billion fell marginally short of the Zacks Consensus Estimate of $6.90 billion by 0.3%. However, the top line inched up only 0.3% year over year owing to soft consumer demand in North America and Canada. The reported figure includes a favorable 0.9% impact from currency. Organically sales decreased 0.6%.
Volume/mix declined 1.6% compared with a decrease of 0.2% in the previous quarter. This was due to lower shipments across several categories in the United States as well as cheese and coffee in Canada.
Pricing was up 1% compared with an increase of 0.5% in the preceding quarter driven by price improvement in Rest of World markets and the United States.
Operating Highlights
Gross profit of $2.4 billion decreased 4% year over year.
Adjusted EBITDA was up 4% to $2 billion in the fourth quarter owing to cost initiatives, lower overhead costs and favorable pricing, partially offset by higher input costs and lower volume/mix.
Quarterly Segment Discussion
Kraft Heinz reports through four segments – the United States, Canada, Europe and Rest of World.
United States: Net sales of $4.8 billion declined 1.1% year over year. Organic sales also fell 1.1% on lower volumes. Volume/mix decreased 1.7% due to some distribution losses on Planters in the club channel, lower shipments in natural cheese and service-related losses in cold cuts. However, this was partially offset by higher demand in Lunchables, P3, Capri Sun ready-to-drink beverages, macaroni and cheese category. Pricing was up 0.6% owing to higher prices in cheese and seasonal items.
Canada: Net sales of $591 million declined 4.1% year over year with a 4.5% favorable impact from currency. Organically, sales declined 8.6% as well. Volume/mix was down 8.6% on lower inventory levels at retail, the discontinuation of select cheese products and lower shipments of coffee. Meanwhile, pricing remained flat compared with the prior-year quarter.
Europe: Net sales of $656 million improved 9.3% year over year with an 8.4% favorable currency impact. Organically, sales were up 0.9%. Volume/mix inched up 1.8% on robust consumption gains in condiments and sauces in Germany, Spain and France. However, pricing declined 0.9% due to changes in promotional spending in Italy, the UK and Russia.
Rest of World: Net sales of $843 million increased 5.2% year over year despite a 1.8% currency headwind. Organically, sales grew 7% on 5.7% higher pricing. Volume/mix increased 1.3% too.
Financials
Kraft Heinz’s ended the quarter with cash and cash investments of $1.6 billion, as of Dec 31, 2017 compared with $4.2 billion as of Dec 31, 2016.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. There have been four revisions lower for the current quarter.
The Kraft Heinz Company Price and Consensus
The Kraft Heinz Company Price and Consensus | The Kraft Heinz Company Quote
VGM Scores
At this time, KHC has a poor Growth Score of F, however its Momentum is doing a lot better with a C. The stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than momentum investors.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. It's no surprise KHC has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.