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Kraft Heinz: Is Disappointment in the Cards for 3Q17?

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Kraft Heinz: Is Disappointment in the Cards for 3Q17? PART 1 OF 5

Why Kraft Heinz Stock Could Remain under Pressure

Analysts expect profits to take a hit

Kraft Heinz (KHC) will announce its 3Q17 results on Wednesday, November 1, 2017. Analysts expect the company’s earnings to remain pressured due to increasing input costs. They project the company’s bottom line to fall on a YoY (year-over-year) basis in 3Q17 due to higher costs and lower pricing due to higher promotions. We’ll look in detail at the company’s EPS (earnings per share) in the next part of this series. 

The company’s sales could return to growth in the quarter, driven by new product launches. The negative impact of currency rates is also expected to fall, which should help its top-line growth. A soft demand for packaged foods in the United States (SPY) and higher coffee and cheese prices could affect the company’s financials and, in turn, investor confidence in the stock.

Why Kraft Heinz Stock Could Remain under Pressure

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YTD stock performance

Kraft Heinz stock has underperformed the benchmark Index on a YTD (year-to-date) basis, falling 11.4% as of October 25, 2017. The S&P 500 (SPX-INDEX) has risen 14.2%.

In comparison, the majority of packaged food manufacturing companies are also witnessing a downtrend in their stock prices. On a YTD basis, Kellogg (K), Conagra Brands (CAG), General Mills (GIS), Campbell Soup (CPB), and JM Smucker (SJM) stock have fallen 17.9%, 14.2%, 16.6%, 23.6%, and 18.8%, respectively.

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