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Stock Strategist

Kraft Stocks Up on Ingredients for Long-Term Success

The stock is trading well below what we think it's worth.


Although Kraft Heinz’s (KHC) share price retreated following the fourth-quarter earnings release, we don’t think there has been a material enough deterioration in the story over the past several months to merit such a pullback. We believe that under the direction of CEO Miguel Patricio, who joined the company in July 2019 from Anheuser-Busch InBev, Kraft Heinz is stocking up on the ingredients necessary for long-term success. It’s pivoting away from blindly rooting out costs in favor of sustainable efficiencies, with the intent to use a portion of savings realized to elevate the standing of its brands.

We attribute some of the market’s disfavor to the delay in when the company intends to convey the details of its strategic direction; it now plans to do so in early May, as opposed to March. However, the premise behind this shift seems reasonable: It affords new U.S. head Carlos Abrams-Rivera, who joined Feb. 3 from Campbell Soup, time to reflect on the tenets of its approach and interject his perspective. We don’t think the extended horizon means that the drive to incite change is on hold.

Erin Lash does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.