Kraft Heinz’s Top Line Soars on the Heels of Renewed Commitment to Brand Spending; Shares a Bargain

We don’t expect any material change to our $52 fair value estimate for no-moat Kraft Heinz after digesting solid fourth-quarter marks of 10.4% organic sales growth, 60 basis points of degradation in the adjusted gross margin to 32.2%, and a 20-basis-point shortfall in its adjusted operating margin to 20.3%. While the market has taken a more somber view (with shares holding flat), we think Kraft Heinz should be on investors’ shopping list, trading at a 25% discount to our intrinsic valuation while offering a 4% dividend yield.