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How HSY, MDLZ, K, and KHC Compare in Terms of Valuations

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Nov. 20 2020, Updated 12:15 p.m. ET

Kraft Heinz trades at premium

As we discuss the valuations of our four major food processor stocks, we should note that the 12-month forward PE (price-to-earnings) multiple will differ among peers based on factors like growth expectations, capital structure, profitability, and risk-return profiles—just to name a few factors.

On June 7, 2017, Kraft Heinz (KHC) was trading at a 12-month forward PE (price-to-earnings) ratio of 24.8x, which is higher than its peers. Moreover, the company is also trading at a higher forward PE multiple than the Consumer Staples Select Sector SPDR ETF (XLP), which has a multiple of 22.0x, and the S&P 500 (SPX), which has a multiple of 19.0x.

Analysts expect Kraft Heinz to post 10.7% growth in its bottom line for 2017, which is higher than peers and supports its premium valuation. The company’s long-term EPS growth rate forecast of 23% remains significantly higher than the peer group.

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Valuation summaries for HSY, MDLZ, and K

As of June 7, Hershey (HSY) is trading at a 12-month forward PE (price-to-earnings) ratio of 23.5x, which is higher than the forward PE multiple of the broader index. On average, analysts project that the company will report a 9% rise in its bottom-line results for 2017.

On June 7, Mondelēz International (MDLZ) and Kellogg (K) were trading at 12-month forward PE ratios of 21.6x and 18.7x, respectively. Analysts project that Mondelēz will report a 9% rise in EPS for 2017, while Kellogg’s bottom line has been forecast to grow by 5%.

For ongoing updates on this industry, keep checking in with Market Realist’s Food Processors page.

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