Good Third Quarter for KHC

Kraft Heinz (KHC) this week reported third quarter EPS of $0.72 vs. $0.63 on a 1% increase in revenues. Results were much better than expectations for ESP of $0.62, on a 2.5% revenue decline. Price increases on average 7.1%, more than offsetting the 5.4% decline in volumes which came from the higher prices. The company realized growth across all its core markets: US Retail, Emerging Markets, and Food Service.

KHC raised their EPS guidance for the year from $2.83 to $2.91 to $2.91 to $2.99. While the company won’t likely be able to raise prices meaningfully in 2024, I believe they can hold market share and still earn $3.00 a share next year. At 11X this estimate, there is still a lot of value in the shares, and the 4.7% dividend yield becomes increasingly attractive if interest rates are topping out.

KHC is a buy below $35 as I target $40.