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Susquehanna Upgrades Kraft Heinz’s Rating to Positive

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Price movement of Kraft Heinz as of January 21

Kraft Heinz Foods Company (KHC) has a market capitalization of $88.6 billion. It rose by 2.6% to close at $73.05 per share as of January 21, 2016. The stock’s price movement on weekly, monthly, and YTD (year-to-date) bases was 3.2%, 4.2%, and 0.40%, respectively, as of that date.

At times, the company’s stock has broken the support of all moving day averages. Currently, KHC is trading 0.92% above its 20-day moving average, 1.6% above its 50-day moving average, and 0.47% below its 200-day moving average.

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What this has meant for FPX and RHS

The First Trust US IPO (FPX) invests 5.2% of its holdings in Kraft Heinz. The ETF tracks a market-cap-weighted index of the 100 largest US IPOs over the first 1,000 trading days of each stock. Stocks must pass additional quantitative screens to make it into the index. The YTD price movement of FPX is -10.9% as of January 20, 2016.

The Guggenheim S&P Equal Weight Consumer Staples ETF (RHS) invests 2.8% of its total holdings in Kraft Heinz. The ETF tracks an equal-weighted index of large-cap US consumers staples stocks drawn from the S&P 500.

The market cap of Kraft Heinz’s competitors are as follows:

  • Mondelez International (MDLZ)—$64.1 billion
  • General Mills (GIS)—$32.1 billion
  • ConAgra Foods (CAG)—$17.0 billion

Susquehanna upgraded Kraft Heinz

Susquehanna has upgraded Kraft Heinz rating from “neutral” to “positive” and set the target of $98.0 per share.

Performance of Kraft Heinz in recent fiscal 3Q15

Kraft Heinz Food Company (KHC) reported fiscal 3Q15 net sales of $6.5 billion, a fall of 9.0% compared to the $6.9 billion it saw in fiscal 3Q14. Its net income and EPS (earnings per share) fell to -$168.0 million and -0.14, respectively, in fiscal 3Q15, compared to $428 million and $0.35, respectively, in fiscal 3Q14.

The company reported adjusted pro forma EBITDA (earnings before interest, tax, depreciation, and amortization) of $1.5 billion in fiscal 3Q15, a fall of 3.4% compared to fiscal 3Q14. Notably, cash and cash equivalents and accounts receivables rose by 93.1% and 89.5%, respectively, in fiscal 3Q15, compared to fiscal 4Q14. Its debt-to-equity ratio fell to 0.92 in fiscal 3Q15, compared to 2.8 in fiscal 4Q14.

In the next and final part of this series, we’ll analyze what’s been happening with Lululemon Athletica as of January 21.

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