KRAFT HEINZ CO/THE (KHC) Stock Fundamental Analysis
NASDAQ:KHC - Nasdaq - US5007541064 - Common Stock - Currency: USD
We assign a fundamental rating of 5 out of 10 to KHC. KHC was compared to 88 industry peers in the Food Products industry. KHC has an excellent profitability rating, but there are concerns on its financial health. KHC has a decent growth rate and is not valued too expensively.
1. Profitability
1.1 Basic Checks
KHC had positive earnings in the past year.
In the past year KHC had a positive cash flow from operations.
In the past 5 years KHC has always been profitable.
Each year in the past 5 years KHC had a positive operating cash flow.
1.2 Ratios
KHC has a Return On Assets (3.11%) which is in line with its industry peers.
With a Return On Equity value of 5.58%, KHC perfoms like the industry average, outperforming 50.00% of the companies in the same industry.
KHC has a Return On Invested Capital of 5.20%. This is comparable to the rest of the industry: KHC outperforms 52.27% of its industry peers.
KHC had an Average Return On Invested Capital over the past 3 years of 4.97%. This is below the industry average of 9.00%.
The last Return On Invested Capital (5.20%) for KHC is above the 3 year average (4.97%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.11% | ||
| ROE | 5.58% | ||
| ROIC | 5.2% |
ROA(3y)2.96%
ROA(5y)2.06%
ROE(3y)5.4%
ROE(5y)3.79%
ROIC(3y)4.97%
ROIC(5y)4.89%
1.3 Margins
The Profit Margin of KHC (10.62%) is better than 86.36% of its industry peers.
KHC's Profit Margin has improved in the last couple of years.
KHC's Operating Margin of 20.81% is amongst the best of the industry. KHC outperforms 96.59% of its industry peers.
In the last couple of years the Operating Margin of KHC has remained more or less at the same level.
KHC has a better Gross Margin (34.73%) than 76.14% of its industry peers.
KHC's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 20.81% | ||
| PM (TTM) | 10.62% | ||
| GM | 34.73% |
OM growth 3Y1.51%
OM growth 5Y0.42%
PM growth 3Y39.8%
PM growth 5Y6.51%
GM growth 3Y1.31%
GM growth 5Y1.14%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so KHC is destroying value.
KHC has less shares outstanding than it did 1 year ago.
The number of shares outstanding for KHC has been reduced compared to 5 years ago.
Compared to 1 year ago, KHC has a worse debt to assets ratio.
2.2 Solvency
KHC has an Altman-Z score of 1.07. This is a bad value and indicates that KHC is not financially healthy and even has some risk of bankruptcy.
KHC's Altman-Z score of 1.07 is on the low side compared to the rest of the industry. KHC is outperformed by 68.18% of its industry peers.
The Debt to FCF ratio of KHC is 6.58, which is on the high side as it means it would take KHC, 6.58 years of fcf income to pay off all of its debts.
With a decent Debt to FCF ratio value of 6.58, KHC is doing good in the industry, outperforming 64.77% of the companies in the same industry.
A Debt/Equity ratio of 0.39 indicates that KHC is not too dependend on debt financing.
KHC has a Debt to Equity ratio (0.39) which is in line with its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.39 | ||
| Debt/FCF | 6.58 | ||
| Altman-Z | 1.07 |
ROIC/WACC0.74
WACC7.02%
2.3 Liquidity
A Current Ratio of 1.06 indicates that KHC should not have too much problems paying its short term obligations.
KHC's Current ratio of 1.06 is on the low side compared to the rest of the industry. KHC is outperformed by 67.05% of its industry peers.
KHC has a Quick Ratio of 1.06. This is a bad value and indicates that KHC is not financially healthy enough and could expect problems in meeting its short term obligations.
With a Quick ratio value of 0.59, KHC is not doing good in the industry: 68.18% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.06 | ||
| Quick Ratio | 0.59 |
3. Growth
3.1 Past
KHC shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 3.03%.
Measured over the past 5 years, KHC shows a small growth in Earnings Per Share. The EPS has been growing by 1.43% on average per year.
Looking at the last year, KHC shows a decrease in Revenue. The Revenue has decreased by -2.98% in the last year.
KHC shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 0.69% yearly.
EPS 1Y (TTM)3.03%
EPS 3Y1.34%
EPS 5Y1.43%
EPS Q2Q%7.69%
Revenue 1Y (TTM)-2.98%
Revenue growth 3Y-0.25%
Revenue growth 5Y0.69%
Sales Q2Q%-4.14%
3.2 Future
The Earnings Per Share is expected to grow by 2.20% on average over the next years.
Based on estimates for the next years, KHC will show a small growth in Revenue. The Revenue will grow by 0.63% on average per year.
EPS Next Y-11.49%
EPS Next 2Y-3.68%
EPS Next 3Y-0.96%
EPS Next 5Y2.2%
Revenue Next Year-3.62%
Revenue Next 2Y-1.31%
Revenue Next 3Y-0.31%
Revenue Next 5Y0.63%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 9.63 indicates a reasonable valuation of KHC.
87.50% of the companies in the same industry are more expensive than KHC, based on the Price/Earnings ratio.
When comparing the Price/Earnings ratio of KHC to the average of the S&P500 Index (28.29), we can say KHC is valued rather cheaply.
A Price/Forward Earnings ratio of 10.88 indicates a reasonable valuation of KHC.
KHC's Price/Forward Earnings ratio is rather cheap when compared to the industry. KHC is cheaper than 90.91% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.08, KHC is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.63 | ||
| Fwd PE | 10.88 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of KHC indicates a somewhat cheap valuation: KHC is cheaper than 72.73% of the companies listed in the same industry.
78.41% of the companies in the same industry are more expensive than KHC, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 11.64 | ||
| EV/EBITDA | 8.49 |
4.3 Compensation for Growth
KHC has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)6.72
EPS Next 2Y-3.68%
EPS Next 3Y-0.96%
5. Dividend
5.1 Amount
KHC has a Yearly Dividend Yield of 5.55%, which is a nice return.
KHC's Dividend Yield is rather good when compared to the industry average which is at 4.43. KHC pays more dividend than 89.77% of the companies in the same industry.
KHC's Dividend Yield is rather good when compared to the S&P500 average which is at 2.57.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 5.55% |
5.2 History
KHC has been paying a dividend for at least 10 years, so it has a reliable track record.
KHC has not decreased its dividend in the past 5 years, so it has a somewhat stable track record.
Dividend Growth(5Y)0%
Div Incr Years0
Div Non Decr Years5
5.3 Sustainability
70.37% of the earnings are spent on dividend by KHC. This is not a sustainable payout ratio.
DP70.37%
EPS Next 2Y-3.68%
EPS Next 3Y-0.96%
29.46
+0.65 (+2.26%)
Chartmill FA Rating
GICS SectorConsumer Staples
GICS IndustryGroupFood, Beverage & Tobacco
GICS IndustryFood Products
Earnings (Last)
Earnings (Next)
Inst Owners59.39%
Inst Owner Change0.02%
Ins Owners0.26%
Ins Owner Change0.03%
Market Cap35.16B
Analysts65.71
Price Target32.39 (9.95%)
Short Float %4.09%
Short Ratio3.37
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 5.55% |
Yearly Dividend1.6
Dividend Growth(5Y)0%
DP70.37%
Div Incr Years0
Div Non Decr Years5
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)3.67%
Min EPS beat(2)0.43%
Max EPS beat(2)6.92%
EPS beat(4)3
Avg EPS beat(4)2.97%
Min EPS beat(4)-0.52%
Max EPS beat(4)6.92%
EPS beat(8)7
Avg EPS beat(8)4.58%
EPS beat(12)11
Avg EPS beat(12)5.78%
EPS beat(16)15
Avg EPS beat(16)8.24%
Revenue beat(2)0
Avg Revenue beat(2)-1.91%
Min Revenue beat(2)-2.29%
Max Revenue beat(2)-1.53%
Revenue beat(4)0
Avg Revenue beat(4)-1.81%
Min Revenue beat(4)-2.29%
Max Revenue beat(4)-1.26%
Revenue beat(8)1
Avg Revenue beat(8)-1.88%
Revenue beat(12)5
Avg Revenue beat(12)-0.63%
Revenue beat(16)8
Avg Revenue beat(16)-0.13%
PT rev (1m)-0.74%
PT rev (3m)-13.94%
EPS NQ rev (1m)-0.61%
EPS NQ rev (3m)-13.25%
EPS NY rev (1m)-0.05%
EPS NY rev (3m)-12.63%
Revenue NQ rev (1m)-0.25%
Revenue NQ rev (3m)-4.94%
Revenue NY rev (1m)0.03%
Revenue NY rev (3m)-3.96%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.63 | ||
| Fwd PE | 10.88 | ||
| P/S | 1.36 | ||
| P/FCF | 11.64 | ||
| P/OCF | 8.4 | ||
| P/B | 0.71 | ||
| P/tB | N/A | ||
| EV/EBITDA | 8.49 |
EPS(TTM)3.06
EY10.39%
EPS(NY)2.71
Fwd EY9.19%
FCF(TTM)2.53
FCFY8.59%
OCF(TTM)3.51
OCFY11.9%
SpS21.66
BVpS41.21
TBVpS-16.41
PEG (NY)N/A
PEG (5Y)6.72
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.11% | ||
| ROE | 5.58% | ||
| ROCE | 6.64% | ||
| ROIC | 5.2% | ||
| ROICexc | 5.29% | ||
| ROICexgc | 38.55% | ||
| OM | 20.81% | ||
| PM (TTM) | 10.62% | ||
| GM | 34.73% | ||
| FCFM | 11.68% |
ROA(3y)2.96%
ROA(5y)2.06%
ROE(3y)5.4%
ROE(5y)3.79%
ROIC(3y)4.97%
ROIC(5y)4.89%
ROICexc(3y)5.05%
ROICexc(5y)5.02%
ROICexgc(3y)48.4%
ROICexgc(5y)52.54%
ROCE(3y)6.35%
ROCE(5y)6.25%
ROICexcg growth 3Y-16.8%
ROICexcg growth 5Y-7.23%
ROICexc growth 3Y1.76%
ROICexc growth 5Y3.9%
OM growth 3Y1.51%
OM growth 5Y0.42%
PM growth 3Y39.8%
PM growth 5Y6.51%
GM growth 3Y1.31%
GM growth 5Y1.14%
F-Score6
Asset Turnover0.29
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.39 | ||
| Debt/FCF | 6.58 | ||
| Debt/EBITDA | 3.04 | ||
| Cap/Depr | 122.79% | ||
| Cap/Sales | 4.5% | ||
| Interest Coverage | 5.94 | ||
| Cash Conversion | 66.14% | ||
| Profit Quality | 110.06% | ||
| Current Ratio | 1.06 | ||
| Quick Ratio | 0.59 | ||
| Altman-Z | 1.07 |
F-Score6
WACC7.02%
ROIC/WACC0.74
Cap/Depr(3y)108.79%
Cap/Depr(5y)97.47%
Cap/Sales(3y)3.92%
Cap/Sales(5y)3.5%
Profit Quality(3y)93.19%
Profit Quality(5y)387.46%
High Growth Momentum
Growth
EPS 1Y (TTM)3.03%
EPS 3Y1.34%
EPS 5Y1.43%
EPS Q2Q%7.69%
EPS Next Y-11.49%
EPS Next 2Y-3.68%
EPS Next 3Y-0.96%
EPS Next 5Y2.2%
Revenue 1Y (TTM)-2.98%
Revenue growth 3Y-0.25%
Revenue growth 5Y0.69%
Sales Q2Q%-4.14%
Revenue Next Year-3.62%
Revenue Next 2Y-1.31%
Revenue Next 3Y-0.31%
Revenue Next 5Y0.63%
EBIT growth 1Y2.59%
EBIT growth 3Y1.26%
EBIT growth 5Y1.11%
EBIT Next Year13.63%
EBIT Next 3Y5.59%
EBIT Next 5Y5.49%
FCF growth 1Y1.92%
FCF growth 3Y-12.18%
FCF growth 5Y1.64%
OCF growth 1Y5.23%
OCF growth 3Y-7.95%
OCF growth 5Y3.33%