Kraft, Heinz co (Nasdaq:HHC), has begun construction of a new history as two established, venerable American brands join forces to confront the modern market. However, the growth of this partnership hit a significant drop in stocks fell to 52-week low. Growth rates remain the same, and many clients have moved away from packaged foods, which is characterized as Kraft and Heinz. Now that the honeymoon Kraft Heinz marriage ended, companies must adapt to the new market if it is to thrive again.
Kraft and Heinz are combined in 2015, the form of Kraft Heinz together. This created the third largest food and beverages in North America. In addition to the brands bearing the company name, Oscar Mayer, planters, and ore-IDA among the brands that exist under the umbrella KKhK.
Investors who do not perform due diligence could assume that because people always need to eat, they will buy products from JSC “khtk” in good times and bad. Unfortunately, khc, this is not the case. Kraft Heinz stock oshibaetsya the same trend that is troubling to those of ConAgra Brands Inc (Ticker NYSE:CAG), General mills, Inc. (Ticker symbol NYSE:GIS), kellogg company (NYSE are:K) and Campbell soup company (Ticker NYSE:CPB).
Both e-Commerce and focus on local and organic food has led to increased competition for large food companies. With e-Commerce, people have more opportunities to buy from small food companies. Consumers are increasingly avoiding packaged foods with ingredient labels that can be understood only by PhD-level biochemists. Now they want the products are fresh and local.
Kraft Heinz Stock Dividends May Be Under Threat
This trend away from packaged food in reducing the number of income for the majority of their peers. HC has somewhat escaped this trend. Revenues in 2017, saw a slight decline from the level of 2016. Analysts predict that revenue for Kraft Heinz stock will be increased each year for the next two years at 1% to 2%. This will help maintain a stable company. However, the company will need a higher level of growth to assure investors that the market has not yet recovered from the products Kraft Heinz.
The stock has seen a brutal downtrend in the last 12 months. The stock is trading at almost 94 per share ten months ago. Today it fell below $60 per share and now is trading at forward price-to-income (PP) 16. With a higher level of growth, I think that is a Fair assessment. However, flat growth could easily turn negative, I find it hard to recommend the stock of Kraft Heinz.
Even his dividends, which looks impressive at first glance, is not enough. Dividend yield increased to 4%. This win also increases every year since Kraft and Heinz together and now stands at $2.50 per share. However, according to analysts, the consensus of a profit of $3.82 per share. Any sustainable downward trend in terms of income puts dividends at risk.
The annual growth of dividends also characterize the stocks of many consumer defense companies. Any reduction in the dividend or even the refusal to increase will be a signal of market weakness. Thus, dividends, which at first glance can attract investors to HC instead of the action serves as a negative catalyst.
The bottom line of stock Kraft Heinz
The market has turned away from packaged foods that characterize Kraft, Heinz, and brands that the company owns. This is the preference of fresh food caused growth to stagnate. Unfortunately, khc investors, television with growth hurt its stock and the company’s prospects.
My colleague Lawrence Meyers called HC “stock sunset in a sunset industry”. This industry has a lot of time to adapt. For this reason, I’m not going to agree. I also think that these companies still find buyers for their products. However, with the dangers that HC and his companions, I want to see clear correlations of PE and the path to sustainable sales increases, before I recommend Kraft Heinz stock or the stock of its peers.
At the time of this writing, will Healy not to take a position in any of the above actions.