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Indra Bhattacharjee's Avatar
published in Blogs
Mar 14, 2019

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.  

Related Ticker: KHC

KHC in upward trend: 10-day moving average moved above 50-day moving average on March 28, 2024

The 10-day moving average for KHC crossed bullishly above the 50-day moving average on March 28, 2024. This indicates that the trend has shifted higher and could be considered a buy signal. In of 16 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are .

Price Prediction Chart

Technical Analysis (Indicators)

Bullish Trend Analysis

The Momentum Indicator moved above the 0 level on March 18, 2024. You may want to consider a long position or call options on KHC as a result. In of 73 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are .

The Moving Average Convergence Divergence (MACD) for KHC just turned positive on March 18, 2024. Looking at past instances where KHC's MACD turned positive, the stock continued to rise in of 43 cases over the following month. The odds of a continued upward trend are .

KHC moved above its 50-day moving average on March 22, 2024 date and that indicates a change from a downward trend to an upward trend.

Following a 3-day Advance, the price is estimated to grow further. 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 .

Bearish Trend Analysis

The RSI Indicator has been in the overbought zone for 2 days. Expect a price pull-back in the near future.

The Stochastic Oscillator demonstrated that the ticker has stayed in the overbought zone for 6 days. The longer the ticker stays in the overbought zone, the sooner a price pull-back is expected.

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 .

KHC broke above its upper Bollinger Band on March 21, 2024. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.

The Aroon Indicator for KHC entered a downward trend on February 22, 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.

Fundamental Analysis (Ratings)

Fear & Greed

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 (0.897) is normal, around the industry mean (8.258). P/E Ratio (15.814) is within average values for comparable stocks, (27.850). Projected Growth (PEG Ratio) (1.033) is also within normal values, averaging (2.580). Dividend Yield (0.044) settles around the average of (0.033) among similar stocks. P/S Ratio (1.693) is also within normal values, averaging (28.527).

The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 77, placing this stock better than average.

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 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 PE Growth Rating for this company is (best 1 - 100 worst), pointing to worse than average 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 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

The most notable companies in this group are Mondelez International (NASDAQ:MDLZ), Kraft Heinz Company (The) (NASDAQ:KHC), General Mills (NYSE:GIS), Campbell Soup Company (NYSE:CPB), Beyond Meat (NASDAQ:BYND).

Industry description

A specialty/candy manufacturer specializes in one or more of the following: chocolate, candies, pasta, condiments, seasonings, among other items. Hershey Company, McCormick & Company and J.M. Smucker Company are some of the major firms in this segment. Demand for this industry’s products comes from both institutions/restaurants as well as households.

Market Cap

The average market capitalization across the Food: Specialty/Candy Industry is 8.18B. The market cap for tickers in the group ranges from 6.25K to 327.81B. NSRGY holds the highest valuation in this group at 327.81B. The lowest valued company is OGGFF at 6.25K.

High and low price notable news

The average weekly price growth across all stocks in the Food: Specialty/Candy Industry was 1%. For the same Industry, the average monthly price growth was 1%, and the average quarterly price growth was 2%. CELV experienced the highest price growth at 144%, while YGFGF experienced the biggest fall at -98%.

Volume

The average weekly volume growth across all stocks in the Food: Specialty/Candy Industry was -54%. For the same stocks of the Industry, the average monthly volume growth was -65% and the average quarterly volume growth was -53%

Fundamental Analysis Ratings

The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows

Valuation Rating: 50
P/E Growth Rating: 68
Price Growth Rating: 50
SMR Rating: 70
Profit Risk Rating: 77
Seasonality Score: 11 (-100 ... +100)
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KHCDaily Signal changed days agoGain/Loss if shorted
 
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published General Information

General Information

a manufacturer of packaged food products

Industry FoodSpecialtyCandy

Profile
Fundamentals
Details
Industry
Food Major Diversified
Address
One PPG Place
Phone
+1 412 456-5700
Employees
36000
Web
https://www.kraftheinzcompany.com
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