Kraft Heinz (NasdaqGS:KHC) Q3 2020 Earnings Prep

in EARNINGS/INVESTING IDEAS by

The Kraft Heinz Company (NasdaqGS:KHC) is scheduled to report Q3 earnings results before markets open for trading on October 29, 2020.

The company is expected to report earnings of $0.62/share on revenue of $6.324 billion. The consensus earnings per share (EPS) of $0.62/share is based on a poll of 18 analysts and represents a decline in eps of −10.3% over the same quarter last year, when the company reported earnings of $0.69/share.

The revenue forecast of $6.324 billion based on a poll of 14 analysts implies a year-over-year (YoY) growth in revenue of 4.1%. Last year the company reported $6.076 billion in revenue for the quarter.

Expected to report EPS contraction of −10.3% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $6,323.58 $6,076.00 4.1%
EPS $0.62 $0.69 −10.3%

Earnings Call Trends

Historically, management has exceeded analyst expectations 6 out of the last 8 tracked quarters, and missed expectations 2 quarters.

What are your expectations from The Kraft Heinz Company for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.65 $0.80 23.1% Beat
Q1, 2020 $0.54 $0.58 6.6% Beat
Q4, 2019 $0.68 $0.72 5.9% Beat
Q3, 2019 $0.54 $0.69 27.1% Beat
Q2, 2019 $0.75 $0.78 3.6% Beat
Q1, 2019 $0.61 $0.66 8.9% Beat
Q4, 2018 $0.94 $0.84 −10.5% Missed
Q3, 2018 $0.81 $0.78 −3.7% Missed

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 27, 2020, the stock price reacted by falling −3.3%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 30, 2020 $35.57 $34.38 −3.3% Decline
April 30, 2020 $30.53 $29.38 −3.8% Decline
February 13, 2020 $30.04 $26.88 −10.5% Decline
October 31, 2019 $28.50 $32.61 14.4% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.72, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.72 implies a 0.3% chance of earnings manipulation.

Fundamentals And Technical Analysis

The Kraft Heinz Company is currently trading at $30.58/share, down −2.5% for the day. The company is trading at approximately 84.1% of its 52-week high of $36.37/share. The company’s stock price is down −11.1% since the last earnings report and down −4.4% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 40.24 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:KHC Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −194.72 and a forward P/E multiple of 11.76.

The Kraft Heinz Company’s current share price also implies a price-to-book (P/B) multiple of 0.76. The following table summarizes some other key fundamental ratios:

Data as of October 27, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 27, 2020
Stock Price (Current) $30.58
P/E Ratio −194.7x
P/E Ratio (Fwd) 11.8x
PEG Ratio −2.0
Total Debt / Total Capital 42.9%
Levered Free Cash Flow $3.865 billion
EV / EBITDA 9.9x

Finbox

The Kraft Heinz Company is a large-cap stock with a market capitalization of $37.386 billion and a total enterprise value of $63.559 billion. The company operates in the Consumer Staples sector and the Food Products industry.

The Kraft Heinz Company, together with its subsidiaries, manufactures and markets food and beverage products in the United States, Canada, the United Kingdom, and internationally. Its products include condiments and sauces, cheese and dairy, meals, meats and seafood, frozen and chilled foods, packaged drinking pouches, appetizers, refreshment beverages, coffee, nuts and salted snacks, infant and nutrition products, and other grocery products, as well as desserts, dressings, toppings, and baking. The company offers its products under the Kraft, Oscar Mayer, Heinz, Philadelphia, Lunchables, Velveeta, Planters, Maxwell House, Capri Sun, Ore-Ida, Kool-Aid, Jell-O, Classico, McCafe, Tassimo, TGI Fridays, Taco Bell Home Originals, Plasmon, Pudliszki, Honig, HP, Benedicta, Karvan Cevitam, ABC, Master, Quero, Golden Circle, and Wattie’s names. It sells its products through its own sales organizations, as well as through independent brokers, agents, and distributors to chain, wholesale, cooperative and independent grocery accounts, convenience stores, drug stores, value stores, bakeries, pharmacies, mass merchants, club stores, foodservice distributors and institutions, including hotels, restaurants, hospitals, health care facilities, and government agencies; and online through e-commerce platforms and retailers. The company was formerly known as H.J. Heinz Holding Corporation and changed its name to The Kraft Heinz Company in July 2015. The Kraft Heinz Company was founded in 1869 and is headquartered in Pittsburgh, Pennsylvania.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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