The news affecting food industry mainstay Kraft Heinz (NASDAQ: KHC) on Wednesday wasn’t all that encouraging, and investors sold out of the stock to cut its price down by more than 3%. That decline was steeper than the 0.3% drop of the S&P 500 index that day.
Kraft Heinz’s third-quarter release showed that the company’s net sales fell by nearly 3% on a year-over-year basis to $6.38 billion. That compared unfavorably to the average analyst estimate, which was slightly higher at $6.43 billion.
On the bottom line, rather uncomfortably Kraft Heinz flipped to a loss. Its deficit for the quarter was $290 million, against the $254 million profit in the year-ago quarter. Yet on a non-GAAP (adjusted) per share basis, the company was actually in the black with an $0.75 per share profit. Even better, this topped the $0.72 it earned in the third quarter of 2023.
During the quarter, Kraft Heinz suffered declines in all three of its regions: North America, international developed markets, and emerging markets. Of the trio, North America is by far the largest, and it booked the most precipitous year-over-year sales drop (3.4%).
In the earnings release, Kraft Heinz quoted CEO Carlos Abrams-Rivera as saying that “When we look at our U.S. Retail business, we are expecting more of an elongated recovery, driven by specific categories that continue to experience pressure.”
In line with this, Kraft Heinz updated its full-year 2024 guidance. It now believes that organic (i.e., adjusted) net sales growth will come in at the low end of its previously published outlook of flat to 2% growth over 2023. Adjusted earnings should also land close to the bottom of the proffered range, in this case $3.01 to $3.07 per share.
A more fundamental problem for Kraft Heinz than the theoretical weakness of the global economy is its product mix. The company isn’t offering much these days that is fresh or innovative, and is behind the curve in the healthy eating trend currently in force with consumers.
Before you buy stock in Kraft Heinz, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Kraft Heinz wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $865,595!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of October 28, 2024
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Kraft Heinz. The Motley Fool has a disclosure policy.
—
Blog powered by G6
Disclaimer! A guest author has made this post. G6 has not checked the post. its content and attachments and under no circumstances will G6 be held responsible or liable in any way for any claims, damages, losses, expenses, costs or liabilities whatsoever (including, without limitation, any direct or indirect damages for loss of profits, business interruption or loss of information) resulting or arising directly or indirectly from your use of or inability to use this website or any websites linked to it, or from your reliance on the information and material on this website, even if the G6 has been advised of the possibility of such damages in advance.
For any inquiries, please contact [email protected]
