fbpx

QQQ
+ 0.35
372.63
+ 0.09%
BTC/USD
+ 511.14
43321.71
+ 1.19%
DIA
+ 0.36
347.20
+ 0.1%
SPY
+ 0.78
442.40
+ 0.18%
TLT
-1.45
149.81
-0.98%
GLD
-0.19
163.70
-0.12%

This Analyst Likes Kraft Heinz Stock And Its 40% Discount To Peers

May 18, 2020 1:30 pm
Share to Linkedin Share to Twitter Share to Facebook Share to Print License More
This Analyst Likes Kraft Heinz Stock And Its 40% Discount To Peers

Kraft Heinz Co (NASDAQ:KHC) is trading at a 40% valuation discount versus its peers and represents a good buying opportunity for investors, according to BofA Securities.

The Kraft Heinz Analyst

Bryan Spillane upgraded Kraft Heinz's stock from Neutral to Buy with a price target lifted from $32 to $38.

The Kraft Heinz Thesis

Spillane said Kraft's valuation discount compared to its packaged food rivals is in part due to a lack of confidence in management's strategy change, little trust in its product portfolio, and question marks related to the balance sheet and dividends. But management started to address these concerns in 2019 and is now well-positioned to not only take advantage of the current eat at home trend but adjust itself to future recessions and other changes.

In terms of the balance sheet, Spillane said the company has enough cash to maintain its current dividend yield of 5.4%. Management was active over the past eight months refinancing existing debt and it has just $1.5 billion in maturities due from now through fiscal 2027. The company still generates $700 million of cash after factoring in dividends and debt obligations which makes the case for market confidence to improve.

The research firm's revised $38 price target is based on 15 times 2021 EPS estimate, which is still a discount to the packaged food group at 16 times but implies the performance gap versus its rivals "is closing," the analyst wrote in the note.

KHC Price Action

Shares of Kraft Heinz were trading higher by 5.6% at $30.86 at time of publication.

Related Links:

A Look At Consumer Shopping Priorities During Coronavirus Pandemic

8 Dividends In Danger Of Being Cut

For the latest in financial news, exclusive stories, memes follow Benzinga on Twitter, Facebook & Instagram. For the best interviews, stock market talk & videos, subscribe to Benzinga Podcasts and our YouTube channel.


Related Articles

Why This Kraft Heinz Sees Room For More Upside After 2-Day Rally

Shares of food giant Kraft Heinz Co (NASDAQ: KHC) are up 10% in two days, marking its fourth-biggest two-day rally in history. read more
Pepsi, Kraft Might Not Be Meme Stocks But They Offer 'Slow And Steady Growth'

Pepsi, Kraft Might Not Be Meme Stocks But They Offer 'Slow And Steady Growth'

Several food and beverage companies reported earnings on Thursday and despite a somewhat boring reputation in the "meme stock" generation, a name like PepsiCo, Inc. (NASDAQ: read more
9 'Summer BBQ' Stocks With A Lot Riding On July 4 Weekend

9 'Summer BBQ' Stocks With A Lot Riding On July 4 Weekend

There’s no question 2020 has been a stressful year for Americans, which is why many people are hoping to forget about business and money this weekend and enjoy the July 4 holiday. For a handful of U.S. companies, the Independence Day weekend will be far from relaxing. read more
A Bitter Taste: Kraft Heinz Struggles To Gain Support

A Bitter Taste: Kraft Heinz Struggles To Gain Support