Kraft Heinz ($KHC) Good Price Good Company Cheese & Bake Beans ?
My afterthoughts to Tiger_chat 's question of whether an investor profits from a good company or a good price ?
"Why not both" I asked myself ?
Wouldn't there be more upsides comparatively speaking ?
Having put the theory to test on different company types (see below for details); time to try it on yet another Food stock.
I am beginning to see all the potentials in Food stock.
Regardless of inflation, deflation, stagflation, recession and even depression - everyone of us have to eat no ?
What could be more essential and basic than food and its condiments ?
Putting $The Kraft Heinz Company(KHC)$ to the test & see if it still fits the bill.
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An American multinational food company formed by the merger of Kraft Foods & Heinz
The merger began in early 2015 and was successfully merged & integrated by 2 Jul 2015
Kraft Heinz is the 3rd largest food and beverage company in North America
In 2021, it was the 5th largest in the world
In 2022, it was ranked #139 in Fortune 500 list of companies
Interesting to know that $Berkshire Hathaway(BRK.A)$ is a major shareholder of Kraft Heinz
Like other bigger food & drinks companies in the US, Kraft Heinz have a broad range of food products and condiments under its belt
It has grown to it current mega cap size via strategic acquisitions of Cerebos Pacific (2017), Primal Kitchen (2019), Hemmer (2021), Assan Foods (2021), Just Spices GmbH (2022),
It has also divested some brands that does not fit into the overall scheme eg. Complan (2019), Cracker Barrel, P’tit Quebec & aMOOza! (2019), Breakstone's, Knudsen, Polly-O, Athenos, Hoffman's, Cracker Barrel cheese (for US), and Cheez Whiz (outside North America) in 2020. its nuts business (including Planters brand) in 2021.
Kraft-Heinz : Product Range
Snapshots of the brands under this Food conglomerate.
In 2022, a year where US market has been hammered by extreme volatility and ease of covid pandemic restrictions - how did Food Giant - Kraft Heinz Company fare ?
Kraft Heinz Company - Summary
Net Sales came in at $7.38 Billion vs $7.27 Billion (Expected) vs $6.71 Billion (Q4 2021); that’s a +9.96% gain.
Net Income (GAAP) came in at $890 Million vs -$257 Million loss (Q4 2021); that’s a +446.3% gain
Earnings per share (GAAP) was $0.72 vs -$0.21 loss (Q4 2021); that’s a +442.86% gain
Earnings per share (non GAAP) was $0.85 vs $0.78 (Expected) vs $0.79 (Q4 2021); that’s a +7.59% gain
For a mega cap company, it is “surprising” to find that its structure is relatively streamlined
Its just North America and International
Bulk of revenue comes from North America (77%) and balance (23%) from International market segment
In terms of quarterly growth its International segment that saw a moderately “higher” rate of +13% vs +9% growth in the N. America segment.
Kraft Heinz Company -
Both market segments continued to register growth for the quarter
Kraft Heinz Company - Other highlights
Like the tech giants and financial institutions that registered huge operating expenses, Kraft-Heinz was no exceptions either
Its selling, general and administrative expenses (SG&A) have ballooned a whooping +48% to $1.14 Billion. Perhaps it is timely for Management to look at how to reduce its costs of doing business; without impacting its overall services and efficiency ?
Kraft Heinz ability to grow its business organically at a healthy +10.4% is encouraging; in the face of rising costs.
“As we look to the rest of the year, we have no current plan to announce new pricing in North America, Europe, Latin America and most of Asia,” said ..CEO Miguel Patricio
Kraft-Heinz Company's CEO on Q4 2022 Results
I am very proud of the entire Kraft Heinz team for a strong year, while continuing to execute our long -term strategy. We are confident that all the work we've done thus far positions us well to accelerate profitable growth and generate attractive returns for our stockholders... Kraft-Heinz Company, CEO, Miguel Patricio.....
Is Kraft-Heinz Company's A Good Price Or A Good Company ?
Continued focus on its newly acquired brands - to further tap into its market and cross pollinate it with its existing staple of products and vice versa
All the same, it is going to continue to grow the business organically
Better manage its exposure to currencies fluctuations due to International market segment “exposure” and the regular US
As a food company that produce consumer staples, it is an ideal option for weathering a recession
It is still registering top line growth QoQ; that’s a good sign.
Do you think Kraft-Heinz company is at a good entry price now ?
Do you think it will be able to better its Q4 2022 earnings in year 2023; with life slowly but surely returning back to normal ?
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