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The Kraft Heinz Co KHC

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Stock XNAS Rating as of
$25.88 −0.35 (1.33%)
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As of Delayed Price Closed

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The Fruits of Its Prioritization of Brand Spending Already Aiding Kraft Heinz's Competitive Prowess

Erin Lash

The 2015 Kraft Heinz merger has yet to deliver a durable improvement in sales and profits. But newly appointed CEO Steve Cahillane sees opportunities to invest in its brands and capabilities—to the tune of an incremental $600 million. With this as its prime directive, he's put the pending plans to split the business on ice. We never thought that separating its operations would bring an enhanced level of focus that would ultimately boost its competitive position or financial prospects. While we look favorably upon this strategic pivot, we recognize it will take time for the benefits from this stepped-up spending to manifest.

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Price vs Fair Value

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KHC is trading at a LOCK|@dP$ premium.
Price
$25.88
Fair Value
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Uncertainty
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1-Star Price
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5-Star Price
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Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Tempered exposure to private label (11% now versus 17% in 2019) and enhanced agility in responding to consumer trends should negate any lasting downdraft in Kraft Heinz's volume.

Bears

Inflation from coffee, eggs, and meats (exacerbated by tariffs) has yet to abate. Volumes may languish amid tempered consumer spending.

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Trading Information

Previous Close Price
$26.23
Day Range
$25.75–27.13
52-Week Range
$21.04–29.19
Bid/Ask
$25.89 / $26.05
Shares Outstanding
1.19B
Market Cap
$30.69B
Volume/Avg
15M / 14M

Key Statistics

Price/Earnings (Normalized)
10.15
Price/Sales
1.23
Dividend Yield (Trailing)
6.18%
Dividend Yield (Forward)
6.18%
Total Yield
6.94%

Company Profile

In July 2015, Kraft merged with Heinz to create one of North America's largest food and beverage manufacturers. Beyond its namesake brands, its portfolio includes Oscar Mayer, Velveeta, and Philadelphia. While the retail channel drives around 85% of its total sales, the firm also maintains a growing foodservice presence. Outside North America, Kraft Heinz's global reach encompasses a distribution network in Europe and emerging markets, which accounts for around 25% of its consolidated sales base. The company's products are sold in more than 190 countries and territories.
Sector
Consumer Defensive
Industry
Packaged Foods
Stock Style Box
Mid Value
Total Number of Employees
35,000
Website
https://www.kraftheinzcompany.com

Competitors

Valuation

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Metric
KHC
CPB
GIS
Price/Earnings (Normalized)
 10.159.2010.70
Price/Book Value
 0.731.632.75
Price/Sales
 1.230.671.11
Price/Cash Flow
 7.485.137.72
Price/Earnings
KHC
CPB
GIS

Financial Strength

Metric
KHC
CPB
GIS
Quick Ratio
 0.720.320.35
Current Ratio
 1.200.870.68
Interest Coverage
 −4.863.371.66
Quick Ratio
KHC
CPB
GIS

Profitability

Metric
KHC
CPB
GIS
Return on Assets (Normalized)
 6.86%4.76%5.93%
Return on Equity (Normalized)
 13.26%18.14%21.35%
Return on Invested Capital (Normalized)
 9.86%8.80%10.05%
Return on Assets
KHC
CPB
GIS

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