Replies to post #236 on Kraft Heinz Company (KHC)

[FUNMAN]

Where's the fake beef? Not at Kraft Heinz, investors worry
Reuters
By Richa Naidu and Siddharth Cavale
September 12, 2019


https://finance.yahoo.com/news/wheres-fake-beef-not-kraft-162526767.html


I'm off the mind that now that there have been high level c-suite changes and a shareholder uproar, mgmt will be eagle-eyed focused on addressing issues to stimulate a turnaround. They already announced more advertising.


By Richa Naidu and Siddharth Cavale

CHICAGO (Reuters) - Investors are chewing out Kraft Heinz Co for failing to lay out a full strategy for how it plans to compete in the roughly $3 billion-a-year plant-based protein market.

At the Kraft Heinz annual meeting to be held in Pittsburgh on Thursday, shareholders will vote on a proposal asking the company to reveal its long-term strategy for imitation meat and alternative proteins.

Products by rivals Beyond Meat Inc and Impossible Foods have become the hottest food trend in recent years, gaining popularity among mainstream consumers looking to cut back on meat consumption.

"It's a fast-growing market and they've been really silent with investors on how they plan to tackle that," said Kyle Kempf, a spokesman for Green Century Funds, which proposed the proxy vote and owns a more than $460,000 stake in Kraft Heinz.

Kraft Heinz has been ranked one of the least proactive major food makers in the plant-based protein market, according to FAIRR, a major investor coalition that includes several Kraft Heinz shareholders. The company's main meat-alternative brand, 40-year-old BOCA Burger, has lost market share since 2013.

"Any company ranking at the bottom clearly has some catching up to do," said Peter van der Werf, head of responsible investment management at Robeco, which owns an $9.6 million stake in Kraft Heinz.

Robeco and another Kraft Heinz investor, NN Investment Partners, told Reuters they were inclined to support the investor demand that Kraft Heinz cough up more specifics about its alternative-protein strategy. Neither company would disclose whether they will vote for the proposal, which Kraft Heinz's board of directors has recommended rejecting.

Kraft Heinz, which took a $15.4 billion writedown this year on its Kraft and Oscar Mayer brands, has been criticized for spending too little on innovation and marketing after years of cost cuts under managers from 3G Capital, Kraft Heinz's No. 2 shareholder. Since the writedown, the company's shares have fallen about 40%.



BOCA LOSES SIZZLE BOCA Burger, credited by some as the original U.S. veggie burger for the masses, was bought by the then-Kraft Foods in 2000. One problem for the aging BOCA Burger, however, is that the current alternative-meat craze is actually being driven not by vegetarians, but by so-called flexitarians - meat-eaters who occasionally buy alternative-protein products. To appeal to these shoppers, Beyond Meat and other upstarts are convincing grocers to stock their products next to fresh-looking animal burgers in chilled-meat cases.

BOCA Burgers, by contrast, are frozen and sit in refrigerators with vegetarian and vegan products, where meat-eaters may not think to look.

Kroger Co, one of the first grocers to sell Beyond Meat patties in meat cases, said on Tuesday it was testing a plant-based protein section in the meat departments of 60 stores to gauge shopper behavior.

BOCA Burger's share of the U.S. plant-based burger market shrank to 3.8% last year, compared with 7.3% in 2013, according to Euromonitor.

Kraft Heinz declined to provide details on its plans for plant-based proteins or comment on the forthcoming shareholder vote. In a filing ahead of the meeting, Kraft Heinz said several named executives had forfeited their bonuses for 2018 due to the company's performance. Chief Executive Officer Miguel Patricio, who took the helm in July, said last month that the company needed to better understand consumers and was "far behind the plant-based market."

Spokeswoman Lynne Galia said Kraft Heinz had increased BOCA sales over the past year, driven by changes to the taste, texture and packaging of its products. "We are committed to ensuring our BOCA products maintain meaningful competitive claims versus meat products, as well as competitive claims in the category as it evolves," Galia said.

But BOCA's new boxes lack the "plant-based" buzzword, and tout an "All American Veggie Burger" at a time when rivals lure meat-eaters by avoiding terms like "vegan" or "vegetarian."

Faryda Lindeman, a senior responsible investment specialist at NN Investment Partners, said big companies including Kraft Heinz that had fallen behind in the plant-based market were likely set in their ways and did not want to invest in new risks. NN Investment holds a $9.4 million stake in Kraft Heinz. "The only thing they can do is to buy other companies of course, they have a lot of cash," Lindeman said. 3G Capital is known for scoring big M&A deals to drive growth, but new Kraft Heinz CEO Patricio said when his appointment was announced in April that his focus, for now, would be on expanding existing brands.

[FUNMAN]

Too Bad - Kraft Heinz (NASDAQ:KHC) Given a $26.00 Price Target at Piper Jaffray Companies
Posted by Elaine Iseri on Sep 14th, 2019

Kraft Heinz (NASDAQ:KHC) received a $26.00 target price from Piper Jaffray Companies in a report issued on Wednesday, September 4th, TipRanks reports. The brokerage currently has a “hold” rating on the stock. Piper Jaffray Companies’ price target points to a potential downside of 11.11% from the company’s previous close. Piper Jaffray Companies also issued estimates for Kraft Heinz’s Q3 2019 earnings at $0.52 EPS, Q4 2019 earnings at $0.63 EPS, FY2019 earnings at $2.59 EPS, Q2 2020 earnings at $0.68 EPS, Q3 2020 earnings at $0.58 EPS, Q4 2020 earnings at $0.65 EPS and FY2020 earnings at $2.48 EPS.

Several other analysts have also issued reports on KHC. Guggenheim set a $25.00 target price on shares of Kraft Heinz and gave the company a “sell” rating in a research report on Monday, August 26th. Barclays set a $30.00 price target on shares of Kraft Heinz and gave the stock a “hold” rating in a research report on Friday, August 9th. BMO Capital Markets dropped their price target on shares of Kraft Heinz from $40.00 to $33.00 and set a “market perform” rating for the company in a research report on Monday, August 12th. Wells Fargo & Co reissued a “hold” rating on shares of Kraft Heinz in a report on Tuesday, September 3rd. Finally, Credit Suisse Group set a $26.00 target price on shares of Kraft Heinz and gave the stock a “sell” rating in a report on Friday, August 9th. Five research analysts have rated the stock with a sell rating, seventeen have issued a hold rating and two have issued a buy rating to the company’s stock. Kraft Heinz has an average rating of “Hold” and a consensus target price of $36.05.


Shares of NASDAQ KHC opened at $29.25 on Wednesday. The company has a debt-to-equity ratio of 0.58, a current ratio of 1.18 and a quick ratio of 0.78. The stock has a market cap of $35.72 billion, a P/E ratio of 8.34, a price-to-earnings-growth ratio of 2.45 and a beta of 0.77. Kraft Heinz has a 1 year low of $24.86 and a 1 year high of $59.36. The firm has a 50-day moving average of $27.76 and a 200 day moving average of $30.70.


Kraft Heinz (NASDAQ:KHC) last announced its quarterly earnings results on Thursday, August 8th. The company reported $0.78 EPS for the quarter, topping analysts’ consensus estimates of $0.75 by $0.03. Kraft Heinz had a negative net margin of 43.40% and a positive return on equity of 6.06%. The firm had revenue of $5.96 billion during the quarter, compared to analyst estimates of $6.07 billion. During the same period in the previous year, the business posted $0.90 earnings per share. The business’s revenue for the quarter was down 5.5% on a year-over-year basis. Research analysts expect that Kraft Heinz will post 2.65 earnings per share for the current fiscal year.

Several hedge funds and other institutional investors have recently modified their holdings of the company. Meridian Wealth Management LLC acquired a new stake in Kraft Heinz in the 1st quarter valued at $27,000. Putnam FL Investment Management Co. purchased a new position in Kraft Heinz in the 2nd quarter valued at $27,000. Zions Bancorporation N.A. lifted its holdings in Kraft Heinz by 303.4% in the 2nd quarter. Zions Bancorporation N.A. now owns 960 shares of the company’s stock valued at $30,000 after purchasing an additional 722 shares in the last quarter. Atlas Capital Advisors LLC purchased a new position in shares of Kraft Heinz during the 2nd quarter worth $31,000. Finally, Horrell Capital Management Inc. purchased a new position in shares of Kraft Heinz during the 2nd quarter worth $31,000. 56.61% of the stock is currently owned by institutional investors and hedge funds.

About Kraft Heinz

The Kraft Heinz Company manufactures and markets food and beverage products in the United States, Canada, Europe, and internationally. Its products include condiments and sauces, cheese and dairy products, meals, meats, refreshment beverages, coffee, and other grocery products. 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, Cracker Barrel, P'Tit Cheese, Tassimo, Classico, Plasmon, Pudliszki, Honig, HP, Benedicta, ABC, Master, Quero, Golden Circle, Wattie's, Glucon D, and Complan names.

[FUNMAN]

KHC is getting creative. This is KHC's second announced innovation following this one ...

https://news.kraftheinzcompany.com/press-release/corporate/heinz-achieves-impossible-launch-new-heinz-tomato-ketchup-blend-veggies

in as many weeks.

This one is a new product, not just reworked, and can add revenue.


Kraft Heinz Flavors Up Coffee Aisle with Non-Alcoholic BAILEYS® Ready-to-Drink Cold Brew Coffee in Cans
September 23, 2019 at 9:38 AM EDT


http://ir.kraftheinzcompany.com/news-releases/news-release-details/kraft-heinz-flavors-coffee-aisle-non-alcoholic-baileysr-ready


Partnership with Iconic BAILEYS® Brand Brings Indulgent Flavors in Cold Brew, Roasted and K-Cup Coffees


PITTSBURGH & CHICAGO--(BUSINESS WIRE)--Sep. 23, 2019-- Bringing an indulgent adult treat and authentic flavors to the coffee aisle, Kraft Heinz is partnering with BAILEYS®, the producers of the world's best-selling cream liqueur, to launch non-alcoholic BAILEYS® Ready-to-drink Cold Brew in cans. In addition, BAILEYS® Roast & Ground Coffee bags and K-Cup pods will also be available for consumers to enjoy the BAILEYS® distinct flavor throughout their day.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20190923005539/en/

Renowned for its indulgent blend of fresh, premium Irish dairy cream, the finest spirits, aged Irish whiskey and a unique chocolate blend, the iconic BAILEYS® Original Irish Cream flavor profile will now be available in non-alcoholic coffee beverages. The BAILEYS® Ready-to-drink Cold Brew will launch with Irish Cream and Salted Caramel flavors with new flavors hitting shelves in 2020.

Three new coffee formats deliver on the flavor and smell of BAILEYS® including:



Ready-to-Drink Cold Brew Coffee – now available

Flavors: Irish Cream and Salted Caramel (both non-alcoholic)

Suggested Retail Price - $2.39



Roast & Ground Coffee (bags) – now available

Flavors: Irish Cream and Chocolate Cherry (both non-alcoholic)

Suggested Retail Price - $7.99



10-count Keurig K-Cup pods – available in September

Flavors: Irish Cream and Chocolate Cherry (both non-alcoholic)

Suggested Retail Price - $7.99




“BAILEYS® is not only the world’s #1 cream liqueur, it’s also one of the most desired adult treats,” said Declan Hassett, Senior Licensing Manager, Diageo. “From ice cream to chocolates, we’ve extended the brand into new indulgent categories but there is nothing closer to the brand than a flavorful cup of coffee. With this partnership, now all adults can treat themselves with the perfect cup of BAILEYS® Ready-to-drink coffee in a can.”

“We’re excited to bring BAILEYS® to the coffee aisle in non-alcoholic everyday formats,” said Tina Bletnitsky, Sr. Associate Brand Manager, Kraft Heinz Coffee. “Consumers have been adding BAILEYS® Irish Cream to their coffee for years so this partnership is a natural fit for those looking for a delicious coffee experience.”

BAILEYS® Ready-to-drink Cold Brew cans are available now at grocers, mass merchandise and on popular e-commerce sites.

Beanstalk, Diageo’s global licensing agency, brokered the licensing partnership.

For more information, go to Facebook.com/Baileys and @BaileysUS on Instagram and @BaileysOfficial on Twitter.

About BAILEYS Irish Cream Liqueur:

BAILEYS launched in Ireland in 1974. It is now available in 180 markets worldwide and is the number one selling liqueur in the world. Owned by Diageo plc, BAILEYS is currently ranked 7th among all distilled spirits sold worldwide and is the best selling Irish Cream Liqueur in the world. It's the signature delicious balance of Irish Cream that makes BAILEYS the perfect little indulgence when you need a break from your daily routine. The BAILEYS portfolio includes Original Irish Cream, Salted Caramel, Vanilla Cinnamon, Chocolate Cherry and Espresso Crème, along with an additional limited time offering, Pumpkin Spice. For more information on BAILEYS Original Irish Cream, please visit us at www.BAILEYS.com.

About Diageo:

Diageo is a global leader in beverage alcohol with an outstanding collection of brands across spirits and beer categories. These brands include Johnnie Walker, Crown Royal, J&B, Buchanan’s and Windsor whiskies, Smirnoff, Cîroc and Ketel One vodkas, Captain Morgan, Baileys, Don Julio, Tanqueray and Guinness. Diageo is a global company, and our products are sold in more than 180 countries around the world. The company is listed on both the London Stock Exchange (DGE) and the New York Stock Exchange (DEO).

About The Kraft Heinz Company:

For 150 years, we have produced some of the world’s most beloved products at The Kraft Heinz Company (NASDAQ: KHC). Our Vision is To Be the Best Food Company, Growing a Better World. We are one of the largest global food and beverage companies, with 2018 net sales of approximately $26 billion. Our portfolio is a diverse mix of iconic and emerging brands. As the guardians of these brands and the creators of innovative new products, we are dedicated to the sustainable health of our people and our planet. To learn more, visit http://www.kraftheinzcompany.com/ or follow us on LinkedIn and Twitter.



View source version on businesswire.com: https://www.businesswire.com/news/home/20190923005539/en/

Source: The Kraft Heinz Company

Kraft Heinz
Lynne Galia
847-646-4396
[e-mail]

[FUNMAN]

Changing My Tune On Kraft Heinz: It's Now A Buy

Sep. 25, 2019
3:32 PM ET

https://seekingalpha.com/article/4293546-changing-tune-kraft-heinz-now-buy?app=1

By Patrick Doyle
The Fox of Wall Street

Summary

* In the 20 months since I wrote my bearish piece on Kraft Heinz, the shares are down ~65%. What was a terrible investment at $80 is a great investment now.

* I'll go through my bullish thesis by reviewing the financial history here, by looking at the stock, and by noting recent dramatic insider activity.

* For those still nervous about buying at these levels, I think short puts offer a great alternative.

Since I wrote my bearish piece on Kraft Heinz Co. (KHC), the shares are down about 65%, against a gain of ~5% on the S&P 500. While this is somewhat gratifying, I want to look in on the name to see if it still deserves an “avoid” rating. After all, what was a terrible investment at $80 may be a wonderful investment at $28. I’ll go through the short financial history here and will look at the stock as a thing distinct from the business. I’ll also note some interesting recent insider activity. I’ll also suggest an options trade for those comfortable with the idea of following in the footsteps of the “Oracle of Omaha” as these present a great “win-win” trade in my estimation. For those who lack the time or patience to wade through my entire article, I’ll come right to the point. This is now a decent investment opportunity, and I’m changing from bearish to bullish on Kraft Heinz at these levels.

Financial Snapshot
A quick look at the financial history here suggests that Kraft Heinz is a so-called “cash cow.” The company generates relatively flat, predictable revenues. Along with that, gross profit remains relatively constant. Net income was obviously impacted recently by the fourth quarter 2018 writedown of goodwill and intangible assets. From page 29 of the most recent 10-K, it was a confluence of factors that caused this writedown, as elaborated on below:

Source: Kraft Heinz 2018 10-K, pp 29

Absent this near $16 billion event, net income for 2018 would have obviously been positive. Now that it’s in the “rear view mirror”, it doesn’t really impact my analysis of the quality of the business going forward. Hopefully, I don’t sound too harsh, but the writedown is the problem of the people who were long in early 2019. From my perspective, and the perspective of prospective longs at this point, this writedown is in a sense a positive as it clears the deck of weak assets.

Turning briefly to the capital structure, I’m not that worried about a credit or solvency crisis anytime soon for a few reasons. First, fully 73% of long-term debt is due after 2023. Second, the interest rate of ~4.2% isn’t excessive in my view. Thirdly, the company has cash and trade receivables represent about 11% of long-term debt. Finally, the debt load has declined over the past six months, which is a very good sign.

The Stock

As I’ve said repeatedly on this forum, investing well is about much more than buying companies that have a chance at growing their cash flows. At least as important is the need to buy those future cash flows at a reasonable price. In my view, it’s axiomatic that the more you pay for something, the lower will be your subsequent returns. While buying companies that are inexpensive won’t guarantee a great result, buying expensive makes failure almost inevitable.

I use a few ways to determine whether shares are expensive or not. Among these, I look at price to free cash flow, and I unpack the market’s assumptions about growth. My problem with Kraft Heinz several months ago was the fact that it was trading at a price to free cash flow of about 34. What a difference 20 months makes. The shares are now objectively inexpensive, in my view, trading for only ~12 times cash flow per the chart below.

In addition to looking at the standard price to free cash flow values, I employ the methodology outlined by Professor Stephen Penman in his great book, “Accounting for Value.” I do this in order to work out what the market assumes about the future growth path for a given company. If the market is too optimistic (as it was in January of 2018, for instance), I’ll avoid the name. The methodology is beyond the scope of this article, but Penman basically uses a standard finance formula (and some high school algebra) to isolate the “g” (growth) variable in a given stock. According to this methodology, the market is assuming a perpetual growth rate of -2.6% from Kraft Heinz which I consider to be excessively pessimistic.

Insider Activity
I’ve said it before, and I’ll say it again. No doubt very often. Not all investors are created equal. Some people, because of training or emotional disposition, are simply better at this activity than most. Additionally, those people who live and breathe the business, and who likely know it better than any Wall Street analyst ever will, do better than most with a particular stock. Thankfully, we have an opportunity to ride the coattails of these institutional and insider investors. I won’t use the activities of other investors as the reason to buy a name (I didn’t accept the “Buffett owns it so I’ll close my eyes and buy” argument back in January of 2018, for instance). That said, I like getting confirmation from people who likely know much more about a given stock than I do, and their recent activity lines up quite nicely with my bullish thesis.

Specifically, Directors Jorge Lemann and Alexander Van Damme have recently spent $100 million and $7 million, respectively, to acquire 3.5 million and 250,000 shares, respectively. When people who know this business best put this much capital into it, I feel ever more comfortable with my bullish thesis.

Options to the Rescue
For those who remain nervous about buying the shares at these levels, I think short put options offer an attractive alternative. If the shares rally from these levels, as I suspect they will, the investor will simply pocket the premiums received, which is never a hardship. If the shares fall from these levels, the investor will be obliged to buy at a predetermined price.

At the moment, my favorite options are the March 2020 Kraft Heinz puts with a strike of $22.50. These are currently bid-asked at $.7-$.85. If the investor simply takes the bid, and is subsequently exercised, they will be obliged to buy the shares at a net price about 22% below the already heavily discounted level. If, as I suspect, the shares rally from here, the investor will simply pocket the premiums.

Conclusion

I think the case of Kraft Heinz reveals the fact that a business can be either a terrible or great investment depending on the price paid. When the shares were trading at a premium because of the “Buffett effect” or whatever else, and were priced as though the underlying business would grow at a rate of 8% in perpetuity, this was a terrible investment. Optimism kills in this business. Now that the market has reversed polarity and is despondent about the shares, that very similar business represents a great investment in my estimation. Insiders seem to agree by their actions. If investors remain worried about the shares, I think put options offer a great “win-win” opportunity at these levels. I think price and value can remain unmoored for a long time, but will meet sooner or later. I think investors would be wise to buy this name now before price rises to match value.

[FUNMAN]

Sounds like cleaning house - Head of Kraft Heinz Northern Europe replaced
03-Oct-2019 By Rod Addy

Georgiana de Noronha has been promoted to president of Kraft Heinz Northern Europe, covering the UK, Ireland and Nordic businesses.

https://www.foodmanufacture.co.uk/Article/2019/10/03/Branded-giant-appoints-Northern-Europe-head