KHC May Be the Next Money-Doubling Stock

Kraft Heinz stock has gained 74% since last March

Jan 28, 2021 at 10:07 AM
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The Kraft Heinz Company (NASDAQ:KHC) is one of the largest food and beverage companies in the world. This past year has been one of the best for Kraft Heinz stock in recent times. Although 18% growth may seem mild in comparison to the outrageous runs other stocks have seen over the past 12 months, KHC will be happy that its bearish form has finally come to an end. KHC went from trading over $90 in 2017 to hitting an all-time low of $19.99 last March. Now, the shares have chart support in place at their 200-day moving average.

KHC Stock Chart

Kraft Heinz will release its fourth quarter earnings Feb. 11 before the open. Looking back to the company’s recent past in the earnings confessional, Kraft Heinz has beat expectations on all four of its most recent quarterly reports. 

For the fourth quarter of 2019, KHC beat expectations by a margin of $0.04 and reported an earnings per share (EPS) of $0.72. For the first quarter of 2020, KHC reported a decreased EPS of $0.58, but still managed to swing an earnings beat by a margin of $0.03. Kraft Heinz stock showed a nice increase in earning for the second quarter of 2020, beating expectations by $0.15 with an EPS of $0.80 reported. Finally, for the third quarter of 2020, KHC announced a decrease in earnings down to $0.70 per share, while still beating expectations by $0.08. However, the stock's post-earnings moves after all of these beats have been muted or negative.

From a fundamental point of view, KHC is a mixed bag. The stock has potential to double in price but, as of right now, the company also has some obvious red flags, most notably its wildly inconsistent net income. In just the span of one year, the company went from producing nearly $11 billion in net profits to generating a net loss of more than $10 billion between 2017 and 2018. Most recently, Kraft Heinz has produced -$192 million on the bottom-line. Adding to the list of concerns, KHC’s total debt currently stands at $28.52 billion, outweighing its cash amount of $2.72 billion by far.

On the other hand, KHC continues to generate annual revenue typically above $25 billion. If KHC begins to turn a profit and delivers on its forward price-earnings ratio of 13.55, Kraft Heinz stock could be due for a sharp increase. In addition, KHC provides a dividend yield of 4.61% at its current price. 

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