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Will Analysts Change Their Outlook on KHC Post-1Q17?

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Nov. 20 2020, Updated 3:52 p.m. ET

Ratings and target price summary

The majority of analysts covering Kraft Heinz (KHC) remain positive on the stock. However, given the company’s sluggish 1Q17 performance, analysts’ consensus outlook could change in the days to come. The consensus rating on Kraft Heinz stock is a 2.0 on a scale of 1.0 (strong buy) to 5.0 (strong sell).

Of the 16 analysts covering Kraft Heinz, 75% rated it as a “buy” on May 4, 2017. KHC stock was rated as a “hold” by 25% of analysts. On the same day, KHC was trading at $89.70, 9.5% below analysts’ 12-month price target of $98.21 per share.

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Peer comparison

Of the 21 analysts covering Mondelēz International (MDLZ), 76.0% have recommended “buys” on the stock, and 24.0% have recommended “holds.” For The Kellogg Company (K), 10% of 19 analysts have rated the stock as a “buy,” 74% have rated it as a “hold,” and 16% have rated it as a “sell.”

Of the 19 analysts covering General Mills (GIS), 11.0% have rated it as a “buy,” and 68.0% have rated it as a “hold.” About 21.0% have rated it as a “sell.” For Conagra Brands (CAG), 65% of 14 analysts have rated the stock as a “buy,” 21% have rated it as a “hold,” and 14% have rated it as a “sell.”

Valuation summary

On May 4, 2017, Kraft Heinz was trading at a 12-month forward PE (price-to-earnings ratio) of 23.4x, significantly above the S&P 500 Consumer Staples Index’s forward PE of 21.2x and the S&P 500’s (SPX) forward PE of 18.7x. The company’s current valuation is higher than the peer average of 20.2x. 

On May 4, General Mills, The Kellogg Company, Conagra Brands, and Mondelēz International were trading at forward PEs of 17.7x, 17.8x, 20.3x, and 20.8x, respectively.

You can get indirect exposure to Kraft Heinz through ETFs such as the Consumer Staples Select Sector SPDR ETF (XLP), which invests 2.8% of its portfolio in the company.

For more updates, visit Market Realist’s Consumer Staples page.

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