Kraft Heinz Co Earnings Beat Forecast, Boosts Dividend 4.3%
Deutsche Predicts 20% Upside
New York, NY — Kraft Heinz Co (NASDAQ:KHC) said today its board approved a 4.3% increase in the company’s quarterly dividend to $0.60 per share of common stock. In addition, the company reported earnings of $0.85 per share ex-items on $6.79 billion in revenue, topping and meeting analyst’s forecasts of $0.72 a share and $6.79 billion in revenue.
“By implementing our integration program and improving our performance in the marketplace, we continued to drive results in the second quarter,” Bernardo Hees, CEO of Kraft Heinz, said in a statement. (Source: “Kraft Heinz Reports Second Quarter 2016 Results,” Kraft Heinz, August 4, 2016.)
“However, to sustain our momentum, we must remain focused on profitable growth, innovations to meet consumer needs in a challenging environment, and improving our operations. We’re off to a good start, but there is still much work to be done,” Hees added. (Source: Ibid.)
Shares of Kraft Heinz rose as much as 4.5% in early trading in New York today after the company increased its quarterly dividend and posted earnings that beat analysts’ expectations for the second quarter.
The food producer, created when Kraft Foods Group Inc merged with H.J. Heinz in July last year, boosted its quarterly dividend by 4.3% to $0.60 per share.
Kraft Heinz is the world’s fifth-largest food company by sales, with brands spanning the supermarket, including “Jell-O” dessert mix, “Oscar Mayer” cold cuts, and “Ore-Ida” Bagel Bites.
Hees says he’s making some big moves, such as removing artificial coloring from macaroni and cheese and inventing a new frozen-dinner brand called “Devour” to capture customers who are flocking to simpler ingredients and fresher food.
“Our biggest challenge remains the fact that you continue to have a number of categories where consumption trends are working against us,” he said. “We have to fix some categories, we have to put more wood on the fire in some categories.” (Source Ibid.)
Quarterly profit quadrupled, helped by aggressive cost-cutting measures and low commodity costs, according to Reuters. However, the company cited currency exchange rates and a higher tax rate versus the prior-year period as headwinds that affected second-quarter gains.
Investors should buy Kraft Heinz on the prospect of better-than-expected cost cutting, according to Deutsche Bank, which raised its rating on the food company to “Buy” from “Hold.” (Source: “Kraft Heinz to rally 20%, says Deutsche Bank,” CNBC, August 5, 2016.)
The firm’s second-quarter earnings results beat Wall Street estimates on Thursday.
“We believe Kraft Heinz is an attractive long-term story with industry-leading margins, solid market share positions across its portfolio,” analyst Mario Contreras wrote in a note to clients Friday. (Source: Ibid.)
“In the near term, we believe Kraft Heinz can exceed its cost savings target and will continue to benefit from a favorable input cost environment,” Contreras added.
Dear Reader: There is no magic formula to getting rich. Success in investment vehicles with the best prospects for price appreciation can only be achieved through proper and rigorous research and analysis. We are 100% independent in that we are not affiliated with any bank or brokerage house. Information contained herein, while believed to be correct, is not guaranteed as accurate. Warning: Investing often involves high risks and you can lose a lot of money. Please do not invest with money you cannot afford to lose. The opinions in this content are just that, opinions of the authors. We are a publishing company and the opinions, comments, stories, reports, advertisements and articles we publish are for informational and educational purposes only; nothing herein should be considered personalized investment advice. Before you make any investment, check with your investment professional (advisor). We urge our readers to review the financial statements and prospectus of any company they are interested in. We are not responsible for any damages or losses arising from the use of any information herein. Past performance is not a guarantee of future results. All registered trademarks are the property of their respective owners
Sign up to receive our FREE Income Investors newsletter along with our special offers and get our FREE report:
5 Dividend Stocks to Own Forever
This is an entirely free service. No credit card required. You can opt-out at anytime.
We hate spam as much as you do.