KHC - Embedded Expectations Analysis - 2020 03 19
ï€ The Kraft Heinz Company (KHC:USA) currently trades below recent averages relative to UAFRS-based (Uniform) Earnings, with a 19.0x Uniform P/E. At these levels, the market is pricing in somewhat bearish expectations for the firm, and management may be concerned about their EBITDA margin, working capital, and divestiture strategyï€ Specifically, management is confident they expect $460mn in 2020 EBITDA headwinds compared to 2019. Furthermore, they may have concerns about their intention to shift support and emphasis to fewer, bigger, and bolder initiatives, and they may lack confidence in their ability to increase prices on commodity products. Moreover, they may be exaggerating their ability to improve their U.S. Nuts and Foodservice business and their focus on gross profit improvement. Additionally, they may have concerns about their working capital and capex and about the proliferation of SKUs with low margins. Finally, they may lack confidence in their ability to evaluate divestiture opportunities which are consistent with their strategy
Kraft Heinz is a food and beverage company. The company manufactures and markets food and beverage products, including condiments and sauces, cheese and dairy, meals, meats, refreshment beverages, coffee, and other grocery products throughout the world. The company has three reportable segments defined by geographic region: United States, Canada, and Europe, Middle East, and Africa. The company's remaining businesses are combined and disclosed as Rest of World. Rest of World comprises two operating segments: Latin America and Asia Pacific.
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