Food industry giant, Kraft Heinz, continues to disappoint analysts. Let's take a deeper dive.
Kraft Heinz (KHC) has not exceeded analyst expectations. Due to the lack of hitting expectations, KHC has dropped about 3.5%.
They have claimed that due to the economic state of the US, consumers are not buying as many of their products as they had hoped. On top of this, the company had pulled Lunchables prepacked meals from schools due to the increase in concern for a healthier approach to school foods.
To add to the list of failures, CEO Carlos Abrams-River mentioned that they did not hit their target sales as they only got 28.85 billion.
Should You Invest?
As always, do your own research. I would not be shocked to see this stock continue on its downward trend. In fact, the company shares have declined by 1/5th within the last 12 months.
ROE= $1.37 billion/ $48.46 billion = 2.84%
(Net profit/shareholders' equity)
KHC's ROE (return on equity) is almost 11% less than the industry average.
PE Ratio= 28.62/1.11 = 25.7
(latest closing price/diluted eps TTM for the last 12 months)
KHC's PE ratio (Price to earnings ratio) is 25.7 which generally means the stock is overvalued.
Knowing that the ROE is a lot lower than the industry average coupled with the fact the PE ratio is 25.7 I would say it is safer to be bearish on this stock.
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