Is Kraft Heinz Co. (KHC) stabilizing after a 3-year freefall?

After a drop of about 69.83 percent over the last 3 years from $96.65 to $29.15, many investors wonder whether it is safe to buy global food and beverage company Kraft Heinz Co. (KHC) stock yet.

As KHC’s next earning report will be delivered on February 13, 2020, analysts will focus on any improvement that shows KHC, which 2018 net sales amounted to $26 billion, is recovering.

Whatever the scope and the pace of such recovery, it seems that any positive development could be interpreted as indication that KHC’s fall has reached a bottom from which it should rebound more likely than not.

The recent naming of Carlos Abrams-Rivera as new U.S. zone President in replacement of CEO Miguel Patricio underlined KHC’s commitment to “rebuild its business momentum and growth”.

At $29.15 and with a forward P/E ratio at 10.46 compared with the industry average of 17.87, KHC stock could well be undervalued.

KHC currently yields 5.49 percent with a dividend of $1.60 and a 54 percent payout ratio, the dividend 5-y CAGR was 3.06 percent for 2014-2018 before KHC cut its dividend by 36 percent from $2.50 in 2018 to $1.60 in 2019.

Data on 5 February 2020
Kraft Heinz Co. (KHC) chart from TradingView.com

Disclosure: Cyceon and/or its management don’t own KHC.

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