Pittsburgh, Pennsylvania-based The Kraft Heinz Company (KHC) manufactures and markets food and beverage products. Valued at a market cap of $27.5 billion, the company’s products include condiments and sauces, cheese and dairy products, refreshment beverages, and other grocery products.
This packaged food company has considerably lagged behind the broader market over the past 52 weeks. Shares of KHC have declined 21% over this time frame, while the broader S&P 500 Index ($SPX) has gained 15%. Moreover, on a YTD basis, the stock is down 3.3%, compared to SPX’s 1.9% return.
Narrowing the focus, KHC has also underperformed the First Trust Nasdaq Food & Beverage ETF (FTXG), which decreased 1.7% over the past 52 weeks and gained 5.2% on a YTD basis.
Last week, reports indicated that Berkshire Hathaway Inc.’s (BRK-B) newly appointed CEO, Greg Abel, has begun steps to divest the firm’s roughly 28% stake, about 325 million shares in Kraft Heinz. The potential sale led to a weak start to the year for KHC, with the stock down over 4% on a YTD basis.
For the current fiscal year, ending in December, analysts expect KHC’s EPS to decline 17.3% year over year to $2.53. The company’s earnings surprise history is promising. It exceeded the consensus estimates in each of the last four quarters.
Among the 21 analysts covering the stock, the consensus rating is a "Hold,” which is based on one “Strong Buy,” 17 “Hold,” one "Moderate Sell,” and two "Strong Sell” ratings.
The configuration is more bearish than a month ago, with one analyst suggesting a “Strong Sell” rating.
On Jan. 21, Matthew Smith, CFA from Stifel Financial Corp. (SF), maintained a "Hold" rating on KHC, with a price target of $26, indicating a 12% potential upside from the current levels.
The mean price target of $25.63 represents a 10.4% premium from KHC’s current price levels, while the Street-high price target of $30 suggests a 29.2% potential upside from the current levels.
