The Kraft Heinz Company (NASDAQ:KHC) just released its quarterly report and things are looking bullish. It was overall a positive result, with revenues beating expectations by 4.1% to hit US$6.0b. Kraft Heinz also reported a statutory profit of US$0.63, which was an impressive 22% above what the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Following last week's earnings report, Kraft Heinz's 16 analysts are forecasting 2022 revenues to be US$25.6b, approximately in line with the last 12 months. Statutory earnings per share are predicted to jump 166% to US$2.66. In the lead-up to this report, the analysts had been modelling revenues of US$24.9b and earnings per share (EPS) of US$2.62 in 2022. So it looks like there's been no major change in sentiment following the latest results, although the analysts have made a slight bump in to revenue forecasts.
It may not be a surprise to see thatthe analysts have reconfirmed their price target of US$43.26, implying that the uplift in sales is not expected to greatly contribute to Kraft Heinz's valuation in the near term. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Kraft Heinz at US$50.00 per share, while the most bearish prices it at US$37.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. One more thing stood out to us about these estimates, and it's the idea that Kraft Heinz's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 0.6% to the end of 2022. This tops off a historical decline of 0.1% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 2.8% per year. So while a broad number of companies are forecast to grow, unfortunately Kraft Heinz is expected to see its sales affected worse than other companies in the industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. The consensus price target held steady at US$43.26, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Kraft Heinz going out to 2024, and you can see them free on our platform here..
We don't want to rain on the parade too much, but we did also find 2 warning signs for Kraft Heinz that you need to be mindful of.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.