KRAFT HEINZ CO. $79(Nasdaq symbol KHC; Conservative Growth and Income Portfolio, Consumer sector; Shares outstanding: 1.2 billion; Market cap: $94.8 billion; Price-to-sales ratio: 5.2; Dividend yield: 2.9%; TSINetwork Rating: Above Average; www.kraftheinzcompany.com) makes condiments and sauces (such as Heinz Ketchup) as well as other packaged foods. These include Velveeta and Philadelphia Cream Cheese, processed meats (such as Oscar Meyer hot dogs) and beverages (such as Maxwell House coffee).
Kraft Heinz took its current form on July 2, 2015, through the merger of Kraft Foods Group and H.J. Heinz. The combined firm is the fifth-largest food and beverage producer globally.
The new company’s sales fell 5.8%, to $27.5 billion in 2015 from $29.1 billion in 2014. Adjusting for currency exchange rates and businesses it sold, sales for 2015 fell just 1.6%.
Earnings fell 46.1%, to $861 million, or $0.70 a share, from $1.6 billion, or $1.31, in 2014. The drop is mainly due to mergerrelated costs. Without unusual items, per-share earnings gained 10.6%, to $2.19 from $1.98.
Kraft Heinz expects to lower its annual expenses by $1.5 billion when it eliminates overlapping operations by 2018.
As of January 3, 2016, the company held cash of $4.8 billion. Its long-term debt of $25.2 billion is a moderate 27% of its market cap.
The stock is up 8% since the merger. It now trades at a high 26.7 times the $2.96 a share that Kraft Heinz will likely earn in 2016. The $2.30 dividend yields 2.9%.
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