Kraft Heinz (KHC, $32.01) sells off its Breakstone’s business to lower debts
Amidst persisting challenges in the dairy industry, Kraft Heinz is planning to slim its business by selling one of its long time brands, Breakstone’s, which sells cottage cheese, butter and sour cream. This move is part of the company’s broader review of its dairy business conducted by the Royal Bank of Canada. It is estimated that Breakstone’s sales could garner a valuation of roughly $400 million.
The dairy industry has been increasingly losing its relevance as customers are turning to non-dairy alternatives like oat, soy and almond milk. Last year, Kraft Heinz announced the sale of its Canadian natural cheese business to Italian dairy group Parmalat for C$1.62 billion ($1.23 billion).
Falling shares of dairy products is another cause for companies to make such selling decisions. Shares of leading U.S. dairy producer Dean Foods (DF), owner of brands like Organic Valley milk, DairyPure sour cream and TruMoo milk, have fallen 68% over the past year. Kraft Heinz’s own shares fell by 25% after the company announced its dismal fourth quarter results in February.
Other food giants like General Mills (GIS) to Kellogg (K) have also felt the pressure of a constraining industry, but Kraft Heinz’s fall was even sharper when two years ago Unilever rejected its acquisition request. Further, the cost cutting strategy of 3G capital, the creator of Kraft Heinz, in important areas like research and development backfired resulting in poor performance.
Now, Kraft Heinz is slimming its portfolio to bring leverage down to three times EBITDA, rather than the four times at which analysts say it is currently pegged. Analysts note it has $3 billion of debt coming due in 2020, which may have to be refinanced.
KHC in +1.28% Uptrend, advancing for three consecutive days on December 13, 2024
Moving higher for three straight days is viewed as a bullish sign. Keep an eye on this stock for future growth. Considering data from situations where KHC advanced for three days, in of 320 cases, the price rose further within the following month. The odds of a continued upward trend are .
Technical Analysis (Indicators)
Bullish Trend Analysis
The RSI Oscillator points to a transition from a downward trend to an upward trend -- in cases where KHC's RSI Oscillator exited the oversold zone, of 41 resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are .
The Stochastic Oscillator shows that the ticker has stayed in the oversold zone for 4 days. The price of this ticker is presumed to bounce back soon, since the longer the ticker stays in the oversold zone, the more promptly an upward trend is expected.
KHC may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
Bearish Trend Analysis
The Momentum Indicator moved below the 0 level on December 13, 2024. You may want to consider selling the stock, shorting the stock, or exploring put options on KHC as a result. In of 72 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .
The Moving Average Convergence Divergence Histogram (MACD) for KHC turned negative on December 19, 2024. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 44 similar instances when the indicator turned negative. In of the 44 cases the stock turned lower in the days that followed. This puts the odds of success at .
Following a 3-day decline, the stock is projected to fall further. Considering past instances where KHC declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
The Aroon Indicator for KHC entered a downward trend on November 26, 2024. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to outstanding earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is seriously undervalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (0.910) is normal, around the industry mean (6.504). P/E Ratio (16.043) is within average values for comparable stocks, (26.887). Projected Growth (PEG Ratio) (1.048) is also within normal values, averaging (2.471). Dividend Yield (0.043) settles around the average of (0.043) among similar stocks. P/S Ratio (1.718) is also within normal values, averaging (66.929).
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating well-balanced risk and returns. The average Profit vs. Risk Rating rating for the industry is 80, placing this stock slightly better than average.
The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is fair valued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating fairly steady price growth. KHC’s price grows at a lower rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
Notable companies
Industry description
Market Cap
High and low price notable news
Volume
Fundamental Analysis Ratings
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
General Information
a manufacturer of packaged food products
Industry FoodSpecialtyCandy